chapter 6 basic guidelines for the improvement plan · in these aimags, however, the demand should...

Chapter 6

Basic Guidelines for

the Improvement Plan

6. Basic Guidelines for the Improvement Plan 6.1. Overview

6.1.1. Future Outlook for Mongolia

(1) Population

1) Forecast Perspectives

In Mongolia, nine sets of future population forecasts (i.e., estimates) were made in

1994, extending to the years 1999, 2004, 2009, 2014, and 2019. The forecasts for 1999

ranged from 2.5249 to 2.5852 million people. At 2.4167 million people, the actual

1999 population was considerably below this range. This survey adopted the set closest

to the actual 1999 figure, and revised the estimates for 2004 and 2009 based on the

1999 data.

2) Forecast results

The population of Mongolia is expected to increase steadily, growing at an annual

average rate of 1.2 percent from 1999 to 2005 and 1.0 percent from 2005 to 2010. The

gravitation into the Ulaanbaatar area is anticipated to continue; the area's share of the

national population is forecast to increase from 28.2 percent in 1999 to 30.2 percent in

2005 and 31.8 percent in 2010.

Figure 6-1 Future Population Framework

Source: Prepared by the JICA Study Team based on population estimates from the Statistical Bureau

Population should grow faster than the national average rate in the Aimags of

Orkhon, Darhan-Uul, Govisumber, and Bayan-Olgii, but to stay on the same level or

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

1985 1990 1995 2000 2005 2010 2015

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

Total Ulaanbaatar Hovsgol Ovorhangai Bayan-Olgii

Total

Ulaanbaatar HovsgolOvorhangaiBayan-Olgii

decline in the other Aimags. Within Aimags, the shift from Soum centers and Bags to

Aimag centers was expected to continue.

(2) Economic Outlook

1) Forecast perspectives

Forecasts of economic indicators for Mongolia are represented by the future

projections extending to 2004 made by the MOF. These projections were adopted as

the economic framework to the same year, and provided the basis for a forecast of gross

domestic product (GDP) and other factors over the years 2005 - 2010.

2) Forecast results

The GDP is expected to exhibit firm growth at annual rates averaging 7.5 percent

over the years 1999-2005 and 3.3 percent over the years 2005-2010. The corresponding

forecast figures for GDP per capita of population are 6.2 and 2.2 percent, respectively.

Figure 6-2 GDP Growth Forecast for Mongolia

(Reference)

Source: prepared by the JICA Study Team based on MOF estimates

-

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

1,600.0

1,800.0

2,000.0

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

GDP (million US$) GDP (US$) / Population

GDP (US$) per capita

Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

US$ - 305.9 412.6 448.0 401.8 430.2 401.8 423.3 452.2 493.8 540.1 565.4

Year 2005 2006 2007 2008 2009 2010

US$ 577.7 590.2 603.0 616.1 629.5 644.5

(3) Socioeconomic Outlook

In Mongolia, the transition to a market economy is anticipated to continue proceeding at a

rapid pace. Economic activities will be centered in Ulaanbaatar. Outside Ulaanbaatar, there

should be a certain degree of growth in Aimag centers which have some growth industries.

On the population basis, the list of promising markets is headed by Ulaanbaatar,

followed by the Aimag centers. Population in Soums and Bags is projected to stay on the

current level or decline along with the socioeconomic gravitation into Ulaanbaatar and the

Aimag centers. There are wide gaps among Aimags and Aimag centers in this respect. At

present, the national population shares are 20.9 percent for Ulaanbaatar, 20.9 percent for the

Aimag centers, 15.9 percent for the Soum centers, and 34.7 percent for Bags and "other" areas.

As this indicates, the focuses are definitely Ulaanbaatar and the Aimag centers. On the

population basis, Ulaanbaatar will continue to be the main market; its share of the national

population is forecast to hit 30.2 percent in 2005 and 31.8 percent in 2010. Following

Ulaanbaatar, a moderate rise in population may be expected in the Aimags of Orkhon, Darhan-

Uul, Govisumber, and Bayan-Olgii. Within Aimags, the main markets will be the Aimag

centers, which will also presumably be a focus of population migration from Soum centers and

Bags.

Table 6-1 1998 Shares of National Population

Source: Statistics Bureau

6.1.2. Outlook for the Postal Service Market

In Mongolia, postal services could not be regarded as fully discharging their function for

the country's economic advancement. As was made clear by the survey of customer needs, this

is primarily because the MPC is not providing services that customers want or need. Figures

for the mail volume per capita in each type of service are on a par with those for GDP per

Total Male Female Total Male Female652,231 317,798 334,433 479,460 227,596 251,864

28.5% 13.9% 14.6% 20.9% 9.9% 11.0%Average 22,831 21

Ulaanbaatar AIMAG CENTER

Total Male Female Total Male Female363,654 178,593 185,061 795,494 400,874 394,620

15.9% 7.8% 8.1% 34.7% 17.5% 17.2%Average 1,162 313 Average 515 1,546

Soum CENTER Bugs, Others

capita in various other countries but much lower in Mongolia. This implies that the inherent

mail demand is not being fully actualized.

While the future development of services is treated later, this section views the potential

of the postal service market in each regional category.

The figure 6-3 shows the gross domestic product (GDP) per capita of population on the

horizontal axis and the number of domestic -mail letters per capital of population on the vertical

axis. While the trend varies somewhat the depending on the country, the number of letters per

capita of population generally rises along with the GDP per capita of population. The

relationship consequently can be expressed by linear equation.

Figure . 6-3 GDP per Capita and Number of letters per Capita in Various Countries

y = 0.0066x + 16.369

y = 0.0078x + 196.9

y = 0.009x + 117.01

y = 0.0016x + 135.26

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

450.00

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000

GDP / Population ($)

Let

ter

Dom

estic

Ite

ms

/ Pop

ulat

ion

Japan Korea France United Kingdom

Japan

Korea

France

United Kingdom

Source: JICA Study Team

Table 6-2 presents a forecast of the number of letters per capita of population relative to

the GDP per capita of population in Mongolia in 2000, 2005, and 2010 based on the trends in

Japan, Korea, France, and the United Kingdom. In 1999, the number of letters came to about

0.18 per capita of population, and this implies the existence of a substantial latent demand.

This demand will presumably be actualized along with progress of transition to a market

economy, stimulation of economic and citizen activities, and improvement of MPC postal

services.

Table. 6-2 Letter Items per person in Mongolia

• Ulaanbaatar

The current socioeconomic status and future outlook indicate that Ulaanbaatar is

and will remain the top market. The forecast for Ulaanbaatar includes steady

population growth, strong economic growth, and a rise in resident incomes. This

should be linked to a corresponding rise in the demand for postal services. At the

same time, market expansion is likely to be accompanied by intensified competition

with other enterprises. Improvement of services and the enterprise's resiliency for

survival in the competition in Ulaanbaatar should be a matter of top priority.

• Aimags

The Aimags of Orkhon, Darhan-Uul, Govisumber, and Bayan-Olgii, where

population is projected to grow, are also expected to experience economic growth and

therefore present good possibilities for a rise in the demand for postal services. Even

in these Aimags, however, the demand should be led by the respective Aimag centers

of Erdenet, Darhan, Choir, and Olgii. In other Aimags, where population is

anticipated to remain on the same level or decline and there are no prospects for

substantial economic growth, the demand will clearly be seated in the aimag centers,

and that on the Soum and Bag levels cannot be expected to increase. Measures for

increasing the level of services in Soums (especially Soum centers) and Bags should

be implemented only after studies to confirm the existence of a sufficient demand.

(1) Issues in Postal Services in Mongolia

1) Definition of Mission

Postal services are an integral part of the social capital supporting socioeconomic

activities in Mongolia. It is vital to make a clear definition of the basic mission of these

services and to use this mission as a standard for action in implementing them.

x y x y x yCase of Korea 0.0066 16.4 423 19 578 20 645 21Case of Ｊapan 0.0016 135.3 423 136 578 136 645 136Case of France 0.0078 196.9 423 200 578 201 645 202Case of U.K. 0.0090 117.1 423 121 578 122 645 123

mathematical expression: y=ax+bx: GDP / Population ($)

y: Letter Domestic Items / Population

2000 2005 2010a b

The nature of this mission should be fully discussed in the Mongol Post Company

(MPC) and government, with the input of views emerging from a widespread sampling

of public opinion. As exemplified by the bill for amendment of the

Telecommunications Law, there is animated discussion about the scope of services at

the MPC, which is providing postal services. Nevertheless, there has not been fully

sufficient discussion on the position of the MPC as a national entity, i.e., the role which

it should play in the national context.

2) Role of the MPC

In Mongolia, the transition to a market economy is rapidly progressing, and there

appears to be some bewilderment about how to go about conditioning the social

infrastructure and what should be done by the concerned principals. It is true that the

movement for reform of telecommunications services, which was triggered by the

decontrol of the telecommunications business, is unfolding with a momentum that is

liable to spread to postal services. However, it must be remembered that this movement

derives from the PTT setup to date; properly speaking, telecommunications and posts

ought to be considered separately from each other.

In countries in the course of economic development such as Mongolia, it is critical

to establish a postal system to serve as a realistic and actual means of communication

among the populace.

While the transition to a market economy is moving ahead, the construction of a

modern postal system must be promoted as a minimum prerequisite for the transition

and as a national project, in the recognition that it is a crucial component of the

socioeconomic infrastructure. This kind of perception is in absolutely no conflict with

the switch to a market economy.

Fortunately, Mongolia has, in the MPC, an entity that can function as the seat of the

postal system. Extensive efforts are being made in the rapid transition from a centrally

planned economy to a market economy, and notable results are being achieved in the

aspect of the national finances as well.

Judging from the current circumstances, however, it could not be said that the

country has solidly established the postal system as a type of socioeconomic

infrastructure fully capable of supporting economic advancement. This is evidenced by

the level of postal service use, which is extremely low even as compared to that in other

countries with a similar economic scale (in terms of GDP per capita of population).

(2) Evolution of the Mongolian Postal System and Issues for the Future

The postal system in Mongolia has undergone momentous change since the collapse of the

socialistic order in 1990. A correct perception and a proper evaluation of this change are

crucial for viewing the outlook for the future.

Table. 6-3 Evolution of the Mongolian Postal System Period Before 1990 1991 - 1995 1995 - 2000

Socioeconomic order

Socialistic Economic collapse Start of transition to a market economy

Postal system Directly managed by the national government

Collapse of the former system and extensive restructuring

Establishment of the MPC Establishment of the financial foundation through diversification into new fields of services while maintaining the level of postal services based on existing assets

Source: Prepared by the JICA Study Team

<Short-term issues>

There can be no doubt that the Mongolian postal system is successfully being stabilized to

a certain degree after the long struggle during the 1990s. More specifically, through

unremitting hard work, it has succeeded in assuring provision of the minimum requisite postal

services under the given circumstantial and environmental conditions. In addition, it is

expanding its scope of business by entering into financial services, and making great progress

in recruiting the related human resources. As a result, it is now realizing a net surplus in its

accounts. Although it evoked some requests for more reliable services, the questionnaire

survey of customer needs conducted as a part of this study did not reveal any widespread

complaints about the services. This indicates that the current MPC services have achieved a

certain stability for certain types of customers. The realistic objectives over the short term are:

1) assurance of reliability and speed, and 2) gradual expansion of services.

・Opinions of the nature described below were received from customers through the

questionnaire survey.

1) Improvement of reliability and speed

・While some customers had thanks and praise for the postal services, this section

concentrates on critical comments, for the purpose of improving services. As far as

reliability and speed are concerned, the respondents noted many problems, including

loss or non-arrival of mail, slow delivery, damage due to rough handling, unauthorized

opening of envelopes (failure to protect confidentiality), rude treatment by postal

employees, and lack of knowledge on the part of employees.

a. Reliability

Steps must be taken to see that mail items are not lost and are delivered within the

prescribed number of days. In addition, laws should be enacted to protect the

confidentiality of correspondence. Employee training and preparation of manuals also

must address the need for an improvement of customer treatment and knowledge of

services and work.

b. Speed

In light of the limitations of the current system for collection, delivery, and

transportation, action to increase speed should, for the time being, consist of the

announcement of a fixed schedule for these operations and provisions to see that the

schedule is strictly observed. A prospect that can be considered in connection with

plans for new services is the initiation of door-to-door delivery and express delivery

services, with publicity emphasizing the availability of rapid services.

2) Improvement of services

a. Classification of postal services

Customers indicated a lack of understanding (or knowledge) of the service

assortment and a perception of the rates as complicated or too high. The MPC also

must study the classification of services and setting of rates.

b. Reorganization of postage rates

There were numerous comments on the expense of postage. Postage should be

considered in terms of comparative advantage of postal services. At present, mail is

slow, unreliable, indirect, and expensive as compared to telephones, especially in

Ulaanbaatar. The situation is similar in the rural areas. Internationally, the advantage

of mail is that it can cheaply send a large amount of information in document form that

can be read at the recipient's convenience. A letter can contain the equivalent of a 30

minutes' conversation on the phone, although it will take more time to receive. It is

advisable to review pricing for better reflection of these comparative advantages. This

should be essential for increasing the mail volume.

c. Classification of services

There is a wide range of services whose provision is desired at post offices, including

postal services, financial services (remittance, payment, etc.), telecom services, sales

of goods, and governmental services. The MPC must define the service assortment

and decide which services are to be available at all post offices and which are to be

offered as the demand permits.

There is also a need for consideration of options such as flexible working hours at post

offices and expansion of locations in correspondence with the demand.

d. Repair of Facilities and Equipment

Customers voiced requests for repair of the post office, improvement of cleanliness,

improvement of the work space environment, and improvement of transportation

equipment. Here as well, detailed studies must be made in connection with the efforts

to improve reliability, speed, and service quality.

<Long-term issues>

Viewed from a long-term perspective, one of the biggest problems in the current business

model is that it offers no prospects for development of needs for core services (in letters and

parcels). In the future, economic activities are expected to quicken along with the country's

socioeconomic recovery and advancement. In the process, various types of communications

activities should grow at least as fast as the economy. Nevertheless, the existing system could

not handle such growth. For example, while business results should be improving given the

recent economic growth, the statistics show that sales associated with EMS, ordinary mail, and

stamps have apparently peaked out, and actually dipped in 1998 - 1999.

The main factor behind this trend is the collapse of the postal network, and particularly the

transportation system, dating from the days of the socialistic order. The situation probably

could not have been avoided in the transition to the market economy. People are reportedly

coping by depending on private postal services as well as telephone and e-mail. However,

there are no signs that the MPC has gotten a firm grasp of the reasons for the decline appearing

in the statistics.

There has also been no accurate apprehension by any party of the reason for discrepancies

such as the rise in sales in the parcel division, where statistics indicate a decline in the handling

volume, and big gaps with figures in accounts1. At any rate, the major issue (task) for postal

services in Mongolia can be summarized in the question of how to construct a postal system

with the extensibility needed to keep abreast of the ongoing transition to a market economy

and function as a key socioeconomic infrastructure supporting the country's economic and

1 On this point, it should be noted that there are several sets of statistics on the mail volume, which may or may not match the record in accounting books. However, this does not change the basic contention here, seeing that even these statistics do not contain a final determination of the handling volume, which is one of the most fundamental data items in postal services, and that this very neglect is a problem in itself.

cultural life.

Issues about MPC

The issues facing postal services in Mongolia can be diagrammed as shown below. They

must be addressed by the MPC. Upon a clear definition of its position, the MPC must resolve

these issues and transform the business by replacing the vicious circle of unfavorable

performance with a beneficent one of expansion.

<Short-term issues>

1) Assurance of reliability and speed

2) Gradual expansion of services

<Long-term issues>

How to construct a postal system with the extensibility needed to keep abreast of the ongoing

transition.

The figure on the next page summarizes these issues that Mongolian Postal System

currently holds. MPC must play the major role to overcome the difficulties and transform the

“vicious circle” to the “beneficent circle”.

Figure. 6-4 Transformation Through Resolution of Issues


Decline in demand for

postal services

Management decisions according precedence to the balance of income

and expenditure, and existing deteriorated assets

Decline/reduction in postal services

Vicious circle of poor

Expansion of the postal demand

Management decisions emphasizing customer needs and execution of the

necessary investment (for human resources and facilities)

Improvement and expansion of postal

services

Beneficent circle of business

＜Short-term issue＞

☆Establishment of reliability and speed ☆Gradual expansion of services

Transformation through resolution of

issues

＜Long-term issues＞

☆Construction of a postal system with extensibility

6.1.3. Basic Guidelines for the Improvement Plan

The improvement plan of the MPC for resolution of the issues and the future outlook

described in each section of Chapter 6 must be formulated in accordance with the following

three guidelines.

(1) Provision of services that match customer needs

If the MPC is to provide postal services discharging the function of infrastructure required

for development of the market economy, it is essential for it to offer services that match

customer needs. It goes without saying that the existing services must be altered for close

conformance with these needs. In light of the goals of establishment of reliability and speed

by restructuring business process over the short term and construction of an extensible system

over the long term, the Study Team proposes a new service to go beyond the existing one,

namely, "Pigeon" mail (featuring door-to-door delivery, low uniform rates, and other attributes

of modern postal services, with the ability for extension).

(2) Establishment of a self-funding capability

In spite of its pronounced public -service dimension, postal services must not be permitted

to operate at a deficit and without regard to feasibility as a business. While efforts have been

made to this end thus far, the MPC must make appropriate investments (planning and

execution) and clear management decisions to enable provision of services meeting new

customer needs.

(3) Establishment of accountability

Seeing that a surplus is already being posted, it could be asserted that the aim of building

a self-funding capability is already being met. The important thing is to reconcile the currently

conflicting ends of providing services that match customer needs and achieving self-sufficient

funding. This must be followed by a shift from the present structure of contracted equilibrium

to one oriented toward expansion by restructuring business process. To this end, the MPC

must establish an internal accountability and take appropriate action. For this purpose, it must

build a solid organization (which, however, must be flexible enough to adjust to customer

needs and the service requirements), strengthen programs for personnel development, and

prepare all sorts of manuals.

6.1.4. Perspectives on Regional Differe nces and Phased Development

In Mongolia, there is now (and will be in the future) a difference between Ulaanbaatar and

the Aimags in respect of concentration of population and economic development. Although

uniform services nationwide is an worthy goal, attractiveness as a market varies with the

degree of customer concentration and income, and this is naturally linked to a difference in the

kinds of service sought and the demand. The plan therefore should deal with Ulaanbaatar and

the Aimags (and lower units) separately.

6.1.5. Ulaanbaatar

As the national capital and the hub of the country's socioeconomic life, Ulaanbaatar is the

area with the greatest influence as regards reconstruction of the postal system.

At present, customers generally go to post offices to deposit and receive mail; they usually

cannot receive postal services at their own address (home or office). The basic model for

receipt of services lies in rental of a PO box at the post office or having post offices keep mail

for them to pick up. This model is, at the same time, a type of base-centered scheme of service

provision and led by the administrative (as opposed to customer) side. To utilize postal

services, customers must go to counters and have the personnel there perform administrative

procedures.

As a result, this model acts to restrain demand. As evidenced by the current status,

although there is some margin in financial resources invested for maintenance of this model,

the inefficiency is tolerated because the demand cannot be expanded. To expand the demand,

it is consequently necessary to free customers from the current administrative procedures and

shift to a more casual use of postal services as a matter of course. This requires a far-reaching

revision of services through a shift of orientation in the five ways noted below. The general

thrust is a switch from services in the manner of public -sector procedures grounded in supply-

side logic to private-sector services grounded in demand-side (customer) logic.

Focal points in revision of post office services:

・ Shift from points to planes (base-centered provision to provision on the site of

demand)

・ Shift from administrative initiative to market initiative

・ Shift from supply-side logic to demand-side logic

・ Shift from passivism to activism

・ Shift from the public sector to the private sector as the demand center

It should also be noted that Ulaanbaatar has already become the scene of competition

around international parcels. This implies a need for the construction of up-to-date

management models designed for survival in competition as opposed to reversion to the

traditional model premised on monopoly, which is becoming an issue in various other

countries.

In light of the considerations noted above, the MPC should convert its business to the

contemporary "Pigeon" management model equipped with the following four capabilities.

Major capabilities of the new postal service model:

・ Instatement of door-to-door delivery

・ Provision of high-quality services

・ Operation with flexibility for adaptation to the demand

・ Active use of private-sector energies

6.1.6. Aimags

In the Aimags, the short-term issues are simple as compared to the case in Ulaanbaatar.

Considering the current domination of publications and the public -sector demand as well as the

status of mail exchange between Aimags, it is clear that postal needs are focused on exchange

with Ulaanbaatar. It may also be observed that the Aimag centers (with some exceptions) and

the Soum centers are relatively small. As such, it would be fully possible to retain the base-

centered scheme of service provision as a fundamental arrangement in the Aimags while

promoting improvement of services with the five-way orientation noted above for services in

Ulaanbaatar.

Over the longer term, the success or failure of the reform represented by the "Pigeon"

model in Ulaanbaatar could provide the basis for decisions (including the practical aspects) on

promotion of such reform in the Aimag.

At any rate, it would be effective to allow the Aimag center post offices, which have a

good understanding of their customers' needs, to lead the programs of improvement in their

own service areas. The new business model should be established first in Ulaanbaatar. If and

when the improvement in accordance with the aforementioned focal points in service revision

makes progress, the new services exemplified by the "Pigeon" model could be introduced in

correspondence with customer needs.

6.1.7. Perspectives on Plans for Phased Improvement

The plans for improvement over the years 2001 - 2010 are studied in terms of two

periods: 2001 - 2005 (short term) and 2006 - 2010 (long term). In reality, the improvement

must be initiated after performance of the process of revising post office services and instating

a new model based on an accurate determination of the trends in the market, which vary with

the region. For the revision of post office services in particular, there are numerous measures

that could be implemented right from an early stage in the short term. While establishment of

the new " Pigeon" model in the market is a long-term end, it will actually require

implementation of various measures over the short term.

* Table 6-4 outlines the agenda in each regional category and phase.

Table. 6-4 Outline of the Plans for Phased Improvement Term

2001 - 2005 (short term) 2006 - 2010 (long term)

Ulaanbaatar Unipolar concentration in Ulaanbaatar Greater unipolar concentration in Ulaanbaatar Rise in the level of customer needs

Existing services ･Refinement and improvement (improvement of customer services, etc.) ･Increase in (expansion of) business result through sales activities

･Shift toward new services ･Maintenance of the status quo for other services

New services ･Construction of a new business model ･Design and construction of facilities adapted to the new services ･Start of sales activities once preparations have been made for regular service ･Increase in vehicles and carrying equipment, etc., to support the new services

・Rapid growth through steady provision of "Pigeon" services

Image of services provided New services

Existing services

Aimags, etc. Socioeconomic conditions on the same level or slightly lower, with the exception of certain Aimag centers

Continued concentration in certain Aimag centers Increased possibility of rise in customer needs in certain Aimag centers

Existing services ･Refinement and improvement (improvement of customer services and outsourcing in correspondence with transportation plans and the market) ･Increase in (expansion of) business result through sales activities

･Increase in postal services and shift to new services in certain areas ･Maintenance of the status quo for other services

New services ･Active determination of needs and the market ･Introduction while monitoring the market and taking Ulaanbaatar as a precedent case

Image of services provided New services

Existing services

Internal organization ･Organization of a team to be in charge of new services and reinforcement of the sales section ･Establishment of the setup for supervision, definition of responsibilities at each stage, and incorporation of arrangements for mutual checking ･Rigorous control of documents and data (preparation of a manual) ･Incorporation of an incentive system into performance evaluation ･Instatement of a systematic program for human resource development adapted to personnel careers ･Presentation of perspectives on outsourcing (preparation of a manual)


6.2. Outlook for Existing Services

As shown in Table 6-5, the demand for existing services may be expected to increase about as fast

as the per capita GDP, assuming maintenance of the current service level and implementation of the

short-term measures of improving quality control and customer treatment.

As compared to that in developed countries with modern postal systems, the demand for existing

services in post offices in Mongolia is on a fairly low level (in terms of the number of items per person

in each service category). The level is also low when viewed from the standpoint of the level of the

GDP per capita of population. An increase in line with the per capita GDP growth rate is fully

conceivable.

Table. 6-5 Target Growth for Existing Services Service level Perspectives on demand

Maintenance of the current service level Growth on the order of the GDP growth per capita of population 1999 - 2005 AAGR: 6.2% 2005 - 2010 AAGR: 2.2%

* GDP per capita imported here can be referred in the Figure 6-2.

Source) JICA Study Team

The following figures show the forecast trend for each existing type of service. Of these types,

the demand for domestic and international letter-post as well as parcels and for EMS would shift to the

new "Pigeon" services once they become established, as described later in this chapter. In view of this

probability, it must be borne in mind that the trends in the figures are of a transient nature.

(1) Domestic Letter-Post

Demand for domestic letters are mostly for official use at the moment. Comparison with foreign

usage of postal services reveal that the current use of domestic mail is way too low by any standards,

with only 0.3～0.4％ of the mail volume per population compared to other countries. It is also an

alarming sign that even with the recovering economy, mail volume actually dropped. Since it is

unthinkable that the potential demand for mail should decline with a growing economy, a significant

service improvement and higher marketing effort are urgently needed.

Figure. 6-5 Forecast of Domestic Letter Post

LETTER POST DOMESTIC

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

1996 1998 2000 2002 2004 2006 2008 2010 2012


(2) Domestic Parcels

Domestic parcel is an area where MPC boasts a monopoly. However, the usage is still extremely

low compared to the international level, with only 0.2～0.4％ of the mail volume per population

compared to other countries. It is also an alarming sign that even with the recovering economy, mail

volume actually dropped. As with the domestic mail service, a significant service improvement and

higher marketing effort are urgently needed.

Figure. 6-6 Forecast of Domestic Parcels

PARCEL DOMESTIC

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1996 1998 2000 2002 2004 2006 2008 2010 2012


(3) International Letter-Post

International mail is at a very high level now, and stable growth is expected as the economy

expands, especially around Ulaanbaatar. International trade should grow, which should increase

transaction of various business documents such as reports, catalogs and invoices. It should also be

noted that although the level of international mail is high by Mongolian standards, it is still at a mere

20 percent of the international level.

One cause for caution is the growth of international courier services, such as DHL and the new

UPS. Service improvement is extremely important in this service area, too.

Figure. 6-7 Trends of International Letter Post

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

1996 1998 2000 2002 2004 2006 2008 2010 2012

Outgoing Incoming


(4) International Parcels

International parcel is under competition from international courier operators, as well as EMS.

The total demand should increase as the level of foreign trade increases, especially around Ulaanbaatar.

The usage of international parcels is at a mere 3.0 percent of the international level, which indicates

that there is more potential demand for this services.

As mentioned, competition from international courier is a concern. MPC should make significant

effort to improve reliability, as well as introduction of competitive tariffs and collection services.

Figure. 6-8 Trends of International Parcels

0

5,000

10,000

15,000

20,000

25,000

1996 1998 2000 2002 2004 2006 2008 2010 2012

Outgoing Incoming


(5) EMS

EMS is also under competition in the international market, although in the domestic market, EMS

(or rather express parcel) is an MPC monopoly. The total demand should increase as the level of

economic activity increases, especially around Ulaanbaatar. However, this also is an area where heavy

competition may be expected. MPC should make significant effort to improve reliability, as well as

introduction of competitive tariffs and collection services

Figure. 6-9 Trends of EMS

0

2,000

4,000

6,000

8,000

10,000

12,000

1996 1998 2000 2002 2004 2006 2008 2010 2012

Outgoing Incoming


(6) Publication

The publication delivery, which forms a large part of the handled volume for MPC at the moment,

needs careful consideration. The service requirements for handling publications and handling mail

differs significantly, both internally and for the user. With the increase of mail volume and possible

competitors, the publication handling may become a burden.

Figure. 6-10 Trends of Publication

PUBLICATION

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

1996 1998 2000 2002 2004 2006 2008 2010 2012


(7) Sales of Stamps

In Mongolia, normal stamps (which are used for normal payment of postage) and stamps for

collection purposes are completely separate. Demand for normal stamps should increase along with

the postal demand. On the other hand, demand for collector stamps are based on the international

demand from the stamp collectors. It has been pointed out that lack of proper announcement,

inconsistent themes and low quality printing of stamps hinder the potential demand for Mongolian

stamps.

(8) Passenger Transportation

The demand for passenger transportation itself should increase along with population growth and

economic recovery. However, the main market would be in the rural Aimags, where growth is likely

to be limited. Also, this service has a very low barrier to entrance, which means that any opportunity

would more likely than not be snatched up by anyone who has a car. Therefore, significant growth is

unlikely.

Figure. 6-11 Trends of Passenger Transportation

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

1996 1998 2000 2002 2004 2006 2008 2010 2012


6.3. Perspectives on Plans for New Services

In addition to the outlook shown in section 6-2, in light of the results of the survey of customer

needs conducted by the JICA Study Team, the MPC cannot achieve advancement over the medium and

long terms with its current level of trustworthiness and existing services; instead, it must take

measures over the short term (up to and including 2005) and effect a noticeable improvement in its

services. The customer survey also indicated that, as the transition to a market economy progresses,

needs for postal and related services will gradually expand. However, there is considerable variation

in respect of the level of demand for each type of service, and knowledge of services is by no means

widespread among customers. For these reasons, the MPC must promote active marketing campaigns

while commencing new services characterized by a high reliability and convenience in a phased

manner, i.e., beginning with the segments of greatest demand.

The cases of postal services in other countries suggest that it is important for the MPC to view the

development of new services from two perspectives: 1) that of postal services using the physical

distribution (logistics) network, and 2) that of post office services using the network of post offices.

Figure 6-12 presents the different facets of the role of post offices in other countries. As shown in this

figure, post offices function as infrastructure for discharge of their public role while also providing

various services and making a contribution to the local community. The augmentation of services

along the lines of this target vision for post offices can be fully expected to further the advancement of

Mongolia as well.

In view of the planning of postal services and post office services, JICA Study Team

summarized those plans in the following section. Details of customer needs survey shall be referred to

the “Supporting Report”.

Figure. 6-12 Role of Post Offices in Other Countries

Financial services・ Remittance and payment・ Proxy performance of bank and

insurance transactions・ Foreign currency exchange・ Payment of public utilities

charges, etc.・ Handling of traveler's checks

Retail sales・ Items for postal packaging・ Miscellaneous goods (stationery,

food products, etc.)・ Newspapers, magazines, books・ Telephone cards・ Tickets for means of transportation・ Tickets for events (concerts, etc.)・ Telephones・ Lottery tickets

Other services

・ Photos for official purposes・ Applications for newspaper

subscription・ Applications for telephone

subscription・ Services using the Internet・ Telegram services・ Fax communication services・ Acceptance of donations to

charity organizations

Administrative (governmental) services

・ Distribution and acceptance of passportapplications

・ Provision of official (governmental) information・ Registration for military conscription・ Handling of tax payments (distribution and

collection of tax forms)・ Handling of social welfare payments (pensions,

etc.)・ Acceptance and transfer of applications for

citizenship・ Receipt of certificates of birth, death, and

marriage・ Issuance of road transport permits・ Motor vehicle registration・ Issuance of television licenses (?)

Contribution to national development

・ Contribution to sense of community and balancednational development

・ Participation in and cooperation with communitydevelopment

・ Contribution related to defense and security・ Hiring of youth・ Contribution to conditioning of the national land・ Execution of work for local governments and welfare

institutions

Source:

JICA Study Team

6.3.1. Plans for New Services

The development of new services must be grounded in a viable vision for the business model. It

demands definition of the kind of value to be delivered to the customer and the kind of action to be

taken by the MPC side. Over the longer term, the MPC must improve services with an awareness of

competing ones as the market expands. As such, it also must take account of the elements of strategy

and differentiation relative to competitors. In the following section, plans for new services for mail,

remittance/payment and post office services are described.

6.3.2 Mail Services

(1) Development of Pigeons Express Services

Modern postal services are important infrastructure for Mongolia during the transformation

period toward market economy. However, as the questionnaire surveys to customers, the issues of

collection and delivery and such are clearly indicating, current postal services are low in reliability,

and their poor quality and inefficiency in operation are pointed out. While to make MPC’s operations

upgraded and efficiency is essentially necessary, it is very difficult to eliminate users’ doubt. As a

consequence, it is considered that introducing the pigeon mail service, which not only eliminate users’

low evaluation for the existing service level, but obtain reliability and enables MPC to provide high

quality and efficient services differing from the existing ones with absolutely new concept.

As agenda items for the time being, the MPC should initiate door-to-door delivery in Ulaanbaatar,

establish new mail handling facilities in Ulaanbaatar designed to prevent damage and loss, and

develop postal services equipped with a reliability and convenience (ease of use) that can bear

comparison with those of competitors. As viewed from the standpoint of the business model, this

clearly entails new services as opposed to services that are merely extensions of the existing ones.

1) Contents of service

- For both international and domestic, letters (documents) and parcels services will be

provided in the totally new manners which has improved reliability, speed and

convenience.

2) Value provided to the customer

- Reliability, speed, convenience

3) Action to be taken by the MPC

- Clear definition of the service areas of each post office and their establishment as centers

of sales in these areas

- Assurance of uniform mail handling facilities

- Establishment of the schedule and method of mail transfer between post offices and the

new handling facilities

- Preparation of marketing materials for services

- Preparation of work manuals for MPC employees

The Pigeons Express Services will occupy a position of importance also for the rippling effects on

and expansion into the future services. The MPC must aim for early implementation of door-to-door

delivery in Ulaanbaatar around the Pigeons Express Services if it is to encourage use, especially by

companies, government, and international organizations, for large-volume purposes such as financial

mail, direct mail, and official documents as well as for high-value-added express services such as EMS.

The current MPC’s EMS services are not widely known by customers and are capable of delivery

for only a limited number of countries. The findings for customer needs indicate considerable use of

the services of DHL and other such competitors. The interview survey found that DHL's share of the

demand for express delivery services in Mongolia is more than 60 percent. In addition, although

customers such as banks indicated needs for same-day delivery within Ulaanbaatar, such services are

not yet offered by competitors. To avoid missing opportunities of this type, and to recapture markets

that are being taken away from it, the MPC must develop express delivery services.

At the same time, it naturally must also implement door-to-door delivery for individuals in view

of the increase in mail sent by companies and organizations to ordinary people as consumers and

citizens.

(2) Perspectives on future targets

The following estimates domestic mails, domestic parcels, international mails and international

parcels developed as a new service called “Pigeon Mail”. This pigeon mail is modeled after a current

postal service in Japan and is totally new for MPC.

Figure. 6-13 Flow Chart of Estimating Demands for Pigeon Mail Service

1) Outline of demand estimation

The demand estimation for the four types of the pigeon mails, which are not provided at the

present situation, has been executed from the concept shown on figure 6-13. First of all, clarifying the

relations between GDP per capita regarded as a common indicator and the number of mails per capita,

the modern type postal service model has been prepared. Next, the number of mails per capita in the

future in Mongolia is calculated by this model and GDP in the provisional future in Mongolia.

Although this can be considered as the future demand of Mongolia, the number of mails per capita and

GDP per capita under the existing services are isolated from the modern type postal service model,

therefore, even if the new pigeon mail service is developed, the modern type postal service won’t be

able to take a steady position. Therefore, the spread rate of the pigeon service was set against the

number of mails per capita and the number of mails per capita in the future set by this model was

made by multiplying the spread rate. The future demand is obtained by multiplying the number of

mails per capita derived from the above process by the future population.

Preparation for the modern type postal service model: f(x) ・A model that estimates the number of mails versus GDP per capita based on the Japanese data.

Setting of the spread rate of pigeon mail service: sn ・Indicator which indicates the fulfilled situation of the model for the number of mails per capita in Mongolia.

Number of mails per capita when existing services are provided: y’n ・Number of existing services (actual) when GDP per capita is at x’n.

Future GDP per capita: xn ・GDP per capita estimated by social economic frame.

The number of mails per capita in provisional future: y”n ・The number of mails per capita obtained by substituting GDP per capita in the future for model

The number of mails per capita in the future: y n ・The number of mails per capita obtained by multiplying the number of mails per capita in provisional future by the spread rate of the pigeon mail service.

Future demand : Yn ・Future demand is obtained by multiplying the number of mails per capita by future demand.

Future population: Popn ・Population estimated by the social economic frame.

Figure. 6-14 Image of Demand Estimation

2) Preparation of modern type postal service model

Since the data according to each service type for the modern type postal service can be obtained

for a long period of time, it was prepared from the Japanese actual results. Because the actual results

in Japan take a range from the times when its GDP per capita was low, the actual results for the past 20

years were utilized. For the function type, it returns for linear, exponential, logarithm and exponent,

the most fitted function types were employed.

Table. 6-6 Modern Type Postal Service Models According to Types Type Function type Model formula Correlatio

n coefficient

Domestic mails Logarithm Y=-47.3043+21.0686ln(X) 0.9404 Domestic parcels Linear Y=1.1666+0.0001X 0.8359 International mails

Logarithm Y=0.0633+0.0954ln(X) 0.8529

International parcels

Logarithm Y=0.0020+0.0020ln(X) 0.8111

Modern type postal service: f(x)

The number of m

ails per capita

GDP per capita

× ×

×

×

×

×

× ×

×

×

×

◇ ◇ ◇

◎

◎

△ △

×: Actual results in Japan ◇: Actual results in Mongolia △: Future GDP per capita in Mongolia ○: The number of mails per capita in provisional future in Mongolia ◎: The number of mails per capita in the future in Mongolia

Spread rate of pigeon mail: sn

× ×

○

○

3) Setting of spread rate for pigeon mail service The spread rate of the pigeon mail service was set as shown in the figure 6-15. Considering the

actual results by existing services standing at base levels, the pigeon mail service is presumed to

gradually spread as a new service. Although the pigeon mail service is considered to be close to the

modern type postal service model from a super long viewpoint, it stands at a substantially low level

due to the low levels of existing services, and based on this status, the spread rates of the pigeon mail

service of each year are calculated multiplying the annual average increasing rates (about 2%).

Figure 6-15 shows the trend of the number of mail items per capita of population per service

relative to the GDP per capita of population. It can be seen that use is on a low level in these terms,

and the instatement of Pigeon Mail services could be expected to improve this situation. Here, it is

assumed that these services will bring an increase in line with the rate of growth in the per capita GDP.

Figure. 6-15 Spread Rate of Pigeon Mail Services

0.000%

0.200%

0.400%

0.600%

0.800%

1.000%

1.200%

1.400%

1.600%

1.800%

1996 1998 2000 2002 2004 2006 2008 2010 2012

Others

0.000%

5.000%

10.000%

15.000%

20.000%

25.000%

30.000%

35.000%

40.000%

45.000%

Docu

ment

INT

ERNA

TION

AL

Document DOMESTIC Parcel DOMESTIC Parcel INTERNATIONAL Document INTERNATIONAL

Figure. 6-16 Targets for Pigeons Express Mail (Domestic Document)

2003 2004 2005 2006 2007 2008 2009 2010

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

Pigeons Express MailDocument DOMESTIC


Figure. 6-17 Targets for Pigeons Express Mail (Domestic Parcel)

2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0

0

1 0 , 0 0 0

2 0 , 0 0 0

3 0 , 0 0 0

4 0 , 0 0 0

5 0 , 0 0 0

6 0 , 0 0 0

P i g e o n s E x p r e s s M a i lP a r c e l D O M E S T I C


Figure. 6-18 Targets for Pigeons Express Mail (International Document)

2003 2004 2005 2006 2007 2008 2009 2010

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

Pigeons Express MailDocument INTERNATIONAL

Incoming Outgoing


Figure. 6-19 Targets for Pigeons Express Mail (International Parcel)

2003 2004 2005 2006 2007 2008 2009 2010

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Pigeons Express MailParcel INTERNATIONAL

Outgoing Incoming


6.3.3. Remittance and Payment Services

(1) Long-term forecast of remittances and payments

1) Forecast of the remittance and payment demand

The estimate for remittance demand may be estimated from the experience of other banks.

At the TDB, income from commissions on remittance and payment services accounts for

about 1 percent of the gross income. Based on market share, MPB may be able to gross out

256 million tugrik (54/0.391).

The scale of the market for remittance and payment services can also be estimated from

the standpoint of the MPB. In 1999, the MPC/MPB remittance and payment income came to

95 million tugrik. The MPC accounts for 65, or 25.0 percent, of the total number of 260

locations in Aimags (in Aimags alone, the number of AB locations was cut to 185). Division

of the 95 million tugrik by 25 percent yields a figure of 380 million tugrik.

A JICA report entitled "Rural Banking Services and Savings Mobilization" released in

February 2000 presents estimates for the extent of people with deposit accounts on the Aimag

and Soum levels. According to the survey, in the nomadic group, about 25 percent of the

respondents had deposit accounts, roughly 20 percent had made remittances. This also

indicates the existence of demand for remittance services.

2) Forecast of the remittance and payment demand (2000 - 2010)

The rate of increase in the national money supply would form an appropriate basis for an

initial forecast of remittance and payment demand. Over the last four years (based on actual

data for April in the case of 2000), the annual growth of money supply was 23.9 percent. If

the market for remittance and payment should increase with this rate, it would undergo a

roughly ten-fold increase (in nominal terms) over the next ten years. However, taking into the

account of the general distrust against the financial system, the increase to 2010 was

consequently forecast at about seven-fold, also taking into account a reduction in commission

rates for remittances and the slowing of the pace of growth in currency in circulation as the

financial situation stabilizes.

Based on this figure, the MPB revenue from commissions on remittance and payment

services would come to over 700 million tugrik as compared to 95 million tugrik in 1999.

The remittance demand could also be forecast on the basis of GDP growth. In this case,

the increase would be held to the three-fold level over the next ten years even if rates are not

lowered. The remittance income for the MPB/MPC would come to about 300 million tugrik

(using the same figure of 95 million tugrik for 1999). Remittance and payment services

would not constitute such a big business in themselves.

3) Forecast of pension handling

The number of people receiving pensions is projected to increase at an average annual

rate of 1.5 percent (as estimated by the Social Insurance Ministry). The total payment amount

is forecast to increase by about 10 percent a year since adjustments are to be made for

inflation beginning in 2000. The commissions on pension handling by the MPC/MPB were

forecast on the basis of the Aimag distribution rate (68.5 percent) and MPC/MPB share (33

percent). This yields a figure of about 77 million tugrik in 2010 as compared to 30 million

tugrik in 2000. This pension income was added to that from remittance and payment

commissions.

Table. 6-7 Forecast of Remittance and Payment Services (MPC/MPB Commission Income)

Forecast of remittance and payment services (MPC/MPB commission income)Unit: hundreds of millions of tugrik

Total amountof currency

Currency incirculation inthe market

DepositsPensioncommissions

Remittance/paymentcommissions

Rate TotalMPC/MPBincome

1991.12 89 16 73 0 (see note)

1992.12 94 18 76 01993.12 272 87 185 01994.12 515 187 328 01995.12 681 255 426 01996.12 1,060 417 643 01997.12 1,258 497 761 01998.12 1,389 564 825 01999.12 2,020 872 1,148 0 3.80 3.0 3.80 0.95

*2000.12 2,495 1,139 1,356 1.32 4.67 3.0 5.99 1.502001 3,069 1.45 5.75 3.0 7.20 1.802002 3,775 1.59 7.07 3.0 8.66 2.172003 4,643 1.75 8.70 3.0 10.45 2.612004 5,711 1.93 10.70 3.0 12.63 3.162005 7,024 2.12 11.84 2.7 13.96 3.192006 8,640 2.33 14.57 2.7 16.90 4.222007 10,627 2.57 17.92 2.7 20.49 5.122008 13,071 2.82 19.83 2.4 22.65 5.662009 16,077 3.11 24.40 2.4 27.51 6.882010 19,775 3.42 26.26 2.1 29.68 7.42

Method of calculation

- Estimates were based on the annual average growth rate of 23.9 percent for the total amount of currency over the last four years.- The figures for December 2000 are for the year ending in April 2000.- For the years 2000 - 2004, the income forecast is based on the increase rate of 23 percent in the total amount of currency.- For the years 2005, 2008, and 2010, the commission rate was lowered by 0.3 percent.Note: A commission rate (percentage) was applied only for general remittances; the fee for pension payments was assumed to be constant.- The MPC/MPB share of this market was put at 25 percent.

* Source of data from 1991 to 1999 is Bank of Mongolia Source: JICA Study Team

Table. 6-8 Forecast of Remittance and Payment Services (MPC/MPB Commission Income)

Forecast of remittance and payment services (MPC/MPB commission income)Unit: hundreds of millions of tugrik

GDPRemittanceand paymentcommissions

Pensioncommissions

MPC/MPBincome

1993 1,6621994 2,8331995 4,2921996 5,8651997 7,5891998 8,7591999 10,128 3.80 0 0.952000 10,553 3.96 0.30 1.292001 11,018 4.13 0.33 1.362002 11,580 4.34 0.36 1.452003 12,263 4.60 0.40 1.552004 12,925 4.85 0.44 1.652005 13,571 5.09 0.48 1.752006 14,250 5.35 0.53 1.872007 14,962 5.61 0.58 1.982008 15,710 5.89 0.64 2.112009 16,496 6.19 0.70 2.252010 17,321 6.50 0.77 2.39

Method of calculation- The rate of increase in the remittance and payment demand was estimated on the basis of GDP growth.- The commissions on pension payments were estimated separately and figured into the totals.The MPC/MPB share of this market was put at 26 percent.


* Source of data from 1993 to 1999 is Ministry of Pension Funds

4) Capital investment for remittance and payment services

MPB remittance services were initiated on a trial basis in 1997, in the Aimag of Hovd,

and began being provided in other Aimags on a regular basis in early 1999. Personal

computers (PCs) were installed in Aimag locations in 1999 at an MPC investment of 39.6

million tugrik for a total of 26 units. Additional investments were made for a total of 12

printers (2.6 million tugrik) and four safes.

For the time being, the MPC is emphasizing profit levels and therefore intends to refrain

from installation of PCs on the Soum level. Around 2005, by which year the profit base is

expected to be solidified, investments will have to be made for installation of PCs in the major

Soums in each Aimag. Assuming installation of an additional ten PCs in each Aimag, 220

more units would have to be purchased. This cost is to be covered by the profits from the

remittance services, and would probably reach about 400 million tugrik.

Table. 6-9 Equipment Investment to MPC (1999) Equipment investment to MPC,1999. 単位：1000Tg

Computer Printere Safty Box

Aimag name Quantity Cost Quantity Cost Quantity Cost Total

1 Arkhangai 1 1,524 1 200 1,724

2 Bayan Olgii 1 1,524 1 214 1,738

3 Bayankhongor 1 1,524 1 150 1,674

4 Bulgan 1 1,524 1,524

5 Govi Altai 1 1,524 1 214 1,738

6 Govi Sumber 1 1,524 1 214 1,738

7 Darkhan Uul 1 1,524 1,524

8 Dornogovi 2 3,048 1 214 3,262

9 Dornod 1 1,524 1,524

10 Dundgovi 1 1,524 1 55 1,579

11 Zavkhan 1 1,524 1,524

12 Orkhon 1 1,524 1,524

13 Ovorkhangai 2 3,048 1 214 3,262

14 Omnogovi 1 1,524 1,524

15 Selenge 3 4,572 3 642 1 50 5,264

16 Sukhbaatar 1 1,524 1,524

17 Tov 1 1,524 1 214 1,738

18 Uvs 1 1,524 1,524

19 Hovd 1 1,524 1,524

20 Hovsgol 1 1,524 1 214 1,738

21 Hentii 1 1,524 1 214 1,738

22 Baganuur 1 1,524 1 214 1,738

Total 26 39,624 12 2,568 4 455 42,647

Source: MPC

(2) Measures for the future

There are no clear grounds or long-term strategy behind the choice of locations opened for

remittance and payment services by the MPC/MPB; the intention was apparently an even development

of the business nationwide. Expediency was also a factor in some cases, as evidenced by siting

through use of some idle postal facilities. A nationwide development of such services should be

avoided. Continued expansion on the Aimag level would hold a strong risk of sizable deficit. The

MPC/MPB must concentrate on Aimags where profits can be ensured by income from remittance and

payment services and pension payment services.

(3) Problems in the contract between the MPC and the MPB

1) Burden of interest payments to depositors and use of deposits

Interest payments to depositors are covered by income from commissions (handling fees).

Although deposit activities have been initiated in some Aimags, this interest due is based on

income from commissions for postal money orders, pension payments, etc.

2) Review of the contract

The contract between the MPC and MPB contains the following stipulations regarding

the processing of accounts for the costs of banking service provision.

a. The MPC and the MPB shall share the cost burden of repair, expansion, and

equipment purchases for banking business, and post these costs in their respective

account books (Article 2, Paragraph 4-a).

b. Operating funds used once for banking business and funds for purchase of facilities to

be used only by the MPB in the future are to be drawn from banking business income

and entered in the account book (Article 2, Paragraph 4-b).

Although the contract stipulates that funds for the purchase of facilities which will be

used only by the MPB are to be drawn from the banking business income, it would be

advisable for the MPB to shoulder part of this burden.

3) Items requiring improvement

As a state-run enterprise, the MPC must exercise sufficient caution in forming

partnerships with private enterprises. The following items require improvement.

a. In the existing contract, in the event of deficit at Aimag branches, the loss is to be

shared equally by the MPC and MPB. However, the MPB specializes in financial

business and ought to be in possession of the know-how for prompt guidance and

improvement before the services in remittance and payment worsen to a significant

degree. The MPC therefore should negotiate for a change in the burden shares.

b. The MPC is providing remittance and payment services on the Aimag level, which is

less feasible than the Ulaanbaatar level. In consideration of this disadvantage, the

MPC should negotiate for the ability to use the deposits collected in Aimags for

financing in Ulaanbaatar (further in the future), and to gain an interest rate profit

margin on this financing. In so doing, it could adopt a fee business method in which

handling fees are added to the cost of deposit collection (inclusive of interest due) in

the Aimags.

(4) New service for demand expansion

1) Remittance system based on deeds

In Mongolia, remittance and payment (exchange settlement) transactions are conducted

mainly on a cash basis. The MPC/MPB should consider the instatement of a remittance

system based on deeds (documents). There are two basic types of such deeds: fixed-amount

postal money orders and ordinary postal money orders. The former are used for remittances

in small amounts. The main target would be use by individuals for presents, etc. The la tter

would enable remittance of up to 500,000 tugrik, for example (the amount being freely

designated) on a single deed. The main target would be use by companies for business. The

commission could be set in the range of 0.5 -1.5 percent of the amount.

The inauguration of remittances by deeds would enhance the convenience for customers.

Because instatement of a delivery service is under study for certain parts of Ulaanbaatar, the

deed-based remittance system could give rise to the following other services: (a) delivery of

cash to the door by registered express mail, and (b) delivery of postal money orders to the

door by registered express mail, and payment of cash upon presentation of money orders at

the post office.

2) Telegraphic money orders

At present, remittances of tuition from people in Aimags to their children in Ulaanbaatar

is accomplished by transmission from the Aimag MPB branch (post office) to the MPB head

office. The information on the invoice for the remittance from the Aimag branch is sent to

the Ulaanbaatar head office by fax or e-mail. If the sender applies for remittance in the

morning, the recipient can pick up the money in cash at the head office on the evening of the

same day.

The start of home delivery service in Ulaanbaatar would make it possible for people to

receive payments at their door through delivery of cash by registered express mail. It would

also be possible to deliver postal money orders to the door by registered express mail and

have the recipients come to the nearest post office to receive cash for them. Although this is

possible to an extent, it takes too much time to be useful. The increased convenience should

add to the level of usage.

3) Remittance and payment service diversification and use of the nationwide network of post

offices and MPB locations.

At post offices in Aimags where deposit accounts are already available (such as Hovd

and Selenge), the business development described below could become necessary for an

expansion of remittance and payment transactions. Over the long term, the related basic

framework should be built for the construction of a remittance and payment system harnessing

the nationwide network of post offices (and MPB locations). In terms of purpose, three types

of services could be offered: pay in, transfer, and pay out. Customers who already have a

deposit account, regularly make remittances, or are anticipated to open a deposit account in

Aimags (over the longer term) could be encouraged to open an account for these services.

The pay-in service would consist of payment into the account of customers who do not have a

postal transfer account. The transfer service would be used for transfer of funds from the

sender's account to the recipient's account. The pay-out service would enable customers to

send payments from their own accounts by a method of their own designation.

There would be three types of remittance payment: cash, check, and postal payment

(delivery of a deed for payment at the counter).

Currently, even checks issued by banks are in sparse circulation due to the bank failures

and rise in the rate of bad debt in 1999 and 2000. It goes without saying that almost no

companies are issuing checks. In the Aimags, checks for small amounts issued by NIC are in

circulation for purchase of gasoline. The MPC/MPB have also issued petty checks for use

only in Aimags, and these are in circulation as well. Issuance of checks by banks and

companies is likely to make a resurgence along with the restoration of confidence in the

banking sector, which will probably take place no sooner than around 2005. At present, the

only options are cash payment at counters and withdrawal of cash from the deposit account

(by companies or individuals) for remittance to the recipient, who receives payment at the

post office counter.

Figure. 6-20 Remittance and Payment System Harnessing the Nationwide Network of Post

Offices (and MPB locations)

Development of three services: pay in, transfer, and pay out

Sending party Receiving party Pay in Payment by a sender who does not have a postal transfer account to a receiver who does

Payment into the account

Transfer Payment from the sender's account to the receiver's account

Cash payment

Check payment

Pay out Remittance to the receiver from the sender's account by the payment method designated by the sender

Postal payment

Payment by deed or cash, by delivery or at the counter Payment in the form of a check issued at the designated post office Delivery of a deed for payment at the counter (telegraphic/ ordinary)

(5) Short- and long-term plans for remittance and payment services

Measures for remittance and payment services should be developed in accordance with short- and

medium-to-long-term plans based on the procedure outlined below.

Over the short term, the plans for these services should emphasize the following points.

First, such services should be offered at all Aimag centers, but confined to those Soums where

they are payable. There is a certain level of demand for these services in Aimag centers, and it would

be possible to hire full-time staff for them. In Soums, on the other hand, the third type (Type C)

should be selected in order to have the same employee perform remittance/payment work when there

is no mail work, and thereby avoid hiring additional personnel just for these services. It is important

to improve the payability of the services over the next two years. The services ought to be positioned

as a business that is supplementary to postal services and performed only when time can be spared

from the latter. Emphasis must be placed on payability.

Even in the six Aimags where the MPC/MPB will be licensed for financing services in the future,

three-person setups for these services should be confined to those districts where they are payable. In

Aimags where big deficits are being recorded, accounts must be balanced by cutting back personnel

requirements. If the deficit-ridden Aimags can be brought to equilibrium, the remittance and payment

division could post an overall profit in 2001. At the least, the MPC/MPB should aim for an overall

equilibrium in 2001. They also should establish and promote business models based on the experience

and methods of Aimags and Soums where these services are profitable.

2002 - 2005

In this period, the MPC/MPB emphasis should shift from profits to business expansion. To this

end, they should gradually invest in PCs, fax machines, and other such equipment for installation on

the Soum level. The installation would begin with Soums that offer the best profitability.

In addition, one employee should be posted to each Aimag center exclusively to be in charge of

sales. This employee would work to develop business among companies and otherwise raise the level

of use.

2006 - 2010

・ Implementation of rationalization measures in correspondence with the commission

rate reduction

・ Introduction of new services, and corresponding diversification of means of remittance

(e.g., payment into a postal account, cash payment, payment by check, and postal payment)

Table. 6-10 Plans for Remittance and Payment Services

Short term (2000 - 2001) Medium-to-long term (2002 - 2010) Business plans * Provision of remittance and payment services in all Aimag centers, but limitation on the Soum level to those Soums where they are payable * Establishment of three-person setups for these services only in those districts where they are payable, even in the six Aimags where the MPC/MPB will be licensed for financial services in the future; aim for balanced accounts through reduction of staff in those Aimags posting big deficits * Positioning of remittances as supplemental to postal services, to be performed during idle times; emphasis on payability * Achievement of an overall profit in the remittance and payment division in 2001 by bringing the deficit Aimags to equilibrium; aim for an overall equilibrium in 2001 at the least * Establishment and promotion of business models based on the experience and methods at Aimags and Soums achieving profits

I. 2002 - 2005 * Emphasis on payability and expansion * Improvement of the payability in Aimags - Consolidation of the business in Soums at deficit into that in neighboring Soums; creation of a structure that constantly produces an overall profit - Posting of one person to each Aimag center exclusively in charge of sales, to develop business among companies and improve the level of service use II. 2006 - 2010 * Rationalization measures in correspondence with the commission rate (percentage) reduction * Introduction of new services - Corresponding diversification of means of remittance (e.g., payment into a postal account, cash payment, check by check, and postal payment) * Investment for installation of PCs, fax machines, safes, and other such equipment, beginning with the most payable Soums


6.3.4. Pos t Office Services

In addition to the mail services and payment/remittance services there will be wide variety of

possibilities in the post office services including telecom, retail, government services, etc. as shown in

the Figure 6-12. More precise information of the needs for such services shall be referred to the

supporting report.

It is important to see the market and needs of each post office area, and decide which service to

add for new services, and suggested that post office masters of each Aimag and all post office masters

in Ulaanbaatar shall make business plan according to type of services. On the other hand, Central Post

Office (Headquarters) shall provide scheme and supports such as marketing/promotion, staff training,

business manuals, etc.

Another important measure is that the governments of Mongolia have to provide necessary

support including entrust of various government services to post offices and provision of appropriate

subsidies and/or benefits, to MPC maintaining post offices all around the country.

The following summarize some new type of post office services.

(1) Mail order and retail services

The current mail order services in the MPC are essentially confined to electrical products. The

circle of goods which people in the communities served by post offices want also includes postal

goods, books and magazines, stationery items, etc. The MPC must consider forming partnerships with

companies handling these goods and examine the prospects for mail order services based on a model

that does not require an inventory and for retail sales that would also be aimed at drawing customers to

post offices by their attractive products/services. It can also be noted that, at present, the (retail) sale

of goods at post offices on the Aimag level, for example, is mistaken for mail order sales in some cases.

To correct such misapprehensions, the MPC must prepare manuals and training for employees and

promote thorough knowledge of the services among all of them.

The aforementioned remittance and payment services also have an important role to play in the

development of these services.

・Contents of service

- Mail Order

- Retail Shop

・Value provided to the customer

- Provision of wide variety of products useful for daily life

・Action to be taken by the MPC

- Expansion of products by additional partnerships with companies

- Clear definition of the business process of mail order in relation to the partner companies,

internal staffs, and customers


- Preparation of work manuals for MPC employees, and training

(2) Business center and e-mail services

In areas other than Ulaanbaatar, there are comparatively strong needs for provision of e-mail and

fax services at post offices. This suggests that the MPC might consider having personnel on the order

of Aimag post office masters make plans for such services and initiating them as new services if they

are found to be commercially viable.

Fax-mail (the so-called Letax service) is a new service that has been introduced at several post

offices during the past two years. In a similar vein, the so-called "e-letter" combining e-mail service

with a print-out and delivery service is a likely candidate for a new service. Fax-mail will require an

individual phone call for each transaction, but the e-letter system would not. Currently, all the Aimag

post offices are equipped with a computer system that exchanges electronic data with the head office

twice a day. This network is expanding to the Soum level along with the introduction of financial

services. It would be feasible to send all the e-mail associated with e-letters along with these

transmissions. This arrangement should entail very little additional communications cost and make

the service extremely convenient and affordable.


- Business center or communication service


- Fulfil communication and business needs in the area of post offices


- Business Plan by post masters in Aimag Centers



(3) Other entrusted services

The MPC should consult with the Mongolian government for active development of services

entrusted by the government and public welfare services. To put it in another way, the MPC must

determine how the Mongolian government wants post offices to function as outlet facilities throughout

the country, and examine the related approaches and concrete measures. The provision of subsidies

and/or other benefits to the MPC as necessary must also be considered for their provision of universal

service.


- Government related services such as payment/ delivery of pension and salary for

government staffs, sales of lottery tickets and payment, applications for government

administrations, payment of taxes, motor vehicle registration, acceptance of donations,

etc.


- Provision of government services to all Mongolian citizens by utilizing post office

network


- Preparation of Business Plan and submission to the government for authorization



・Action to be taken by Mongolian Government

- Decision of how to utilize post office network as governmental outlets all over Mongolia

- Provision of appropriate subsidies and/or benefits to MPC for their provision of

universal service.

6.3.5. Information System Infrastructure for Promotion of the New Services

The current information system in the MPC could not be said to be in perfect order and

effectively used.

Personal computers are installed in the Aimag center post offices and post offices in Ulaanbaatar.

These enable connection (by modem) with the head office twice a day. Computer communication is

limited to the record of bank transactions and instructions from the head office.

It can also be noted that the in-house work at Aimag post offices is not very computerized.

Almost all of the routine financial recording and bookkeeping is written by hand. Computerization

does not go beyond the exchange of electronic files by a few progressive post offices. As this implies,

the capabilities of computers are woefully underused.

In light of this situation, aside from the further task of adding new facilities, the MPC must make

more effective use of its existing ones. There is no need for development of any complicated software;

efficiency could be improved substantially in the entire process from input and data totalization to data

application merely by preparing and distributing templates for tabular calculation for use in account

book entries throughout the company.

One possibility for more sophisticated use of information technology (IT) is the installation of

various facilities for mail tracking. In this case, the software would be more important than purchase

of new hardware. The choice of software would have to be carefully studied with a attention to the

match with the level of technology in Mongolia.

6.4. Collection, Delivery, and Sorting Work Plans

6.4.1. Establishment of Dedicated Facilities

As noted in the above section, there are major problems in the division of postal parcels, which

ought to be accorded the greatest emphasis in the postal services at present. The situation must be

urgently improved.

The most effective step for improvement would be assurance of ample work space.

Fortunately, there is a vacant lot measuring about 800 square meters to the side of the current

Central Post Office building. The construction of a building especially for postal services on this lot

would not only improve the handling of postal items but also enable use for implementation of door-

to-door delivery on a trial basis.

Furthermore, the use of this site would make the necessary improvements possible without a

decline in the level of current customer services. As such, the construction of a new building on it is

highly recommended.

6.4.2. Improvement of Delivery Work

The current status of mail delivery in Ulaanbaatar is described in the first section of this chapter.

It is beyond question that performance of door-to-door delivery for all items is an extremely vital task

that must be achieved eventually. However, execution today, when the annual volume of mail

averages less than one item per capita of population, would involve too many problems. The

cooperation of the receiving side is needed for sure delivery of items with as little manpower as

possible.

The most necessary step in this direction is the installation of boxes for collection of mail at each

door (at locations that are convenient for delivery in the case of medium- and high-rise residential

buildings). In Ulaanbaatar, where many people live in apartment buildings, delivery to each apartment

would take a substantial commitment of manpower and require a considerable increase in the number

of carriers even if there is not such a great expansion in the mail volume.

Moreover, given the current housing situation, it would be difficult to find places where mail

could be left when the occupant is gone. It is doubtful whether loss and theft could be prevented if

mail were left without proper assurances of security.

Nevertheless, it would be, in effect, impossible to compel all households to install mail boxes

when many have no expectations of receiving mail.

These observations suggest that it would be unreasonable to expect the door-to-door delivery to

be implemented uniformly and promptly.

The same requirements apply to delivery to groups and companies. When two or more

organizations are in the same building, arrangements should be made for deliveries for all at a single

place, as far as possible. This must be achieved for mail items that do not require recording.

As a transitional measure in this area, it appears necessary to retain the current system of

delivering mail items and newspapers upon the conclusion of special contracts at the post offices in

charge.

At the same time, there is probably a need for instatement of a new system in parallel for delivery

based on registration under certain conditions (e.g., installation of collective mail boxes) for response

to parties who are dissatisfied with the current situation and want prompt delivery.

This could begin with the establishment of a delivery division in the Central Post Office and

special delivery districts in central Ulaanbaatar. Deliveries would be made to the registered recipients

by the fastest means, and the service could be gradually expanded in correspondence with the demand

and setup preparations.

If coordinated with the promotion of improvement in indoor work in the Central Post Office, the

delivery time could be reduced by more than one day as compared to the present, and this would

presumably do much to expand use.

Once this service has been placed on track and the mail volume increases, the post office could

proceed to the ultimate objective of door-to-door delivery for all mail. In this case, the work of the

current delivery post offices would, of course, be confined to counter work and distribution in PO

boxes.

For progress to this end at the present stage, each post office should compile delivery-related

materials for their area, including lists of residents, delivery ledgers, and delivery maps.

6.4.3. Reconstruction of the Postal Code Number System

The first two digits of the postal code are called the country code, and indicate the country of

Mongolia. At present, however, such numbers are not in international use, and the code is

consequently devoid of meaning. The postal code number therefore may be regarded as consisting, in

effect, of four digits.

Of these four digits, the first two indicate the district in the case of Ulaanbaatar (i.e., mail directed

to addresses in Ulaanbaatar) and the Aimag in other cases (i.e., mail directed to addresses in Aimags).

Although the scope differs, they are basically in the nature of regional indicators. The second two

indicate the Soum in the case of Aimags and the name of the post office in the case of Ulaanbaatar.

The assignment of numbers to post offices is random, and some post offices have service areas that

straddle two districts. For this reason, the postal code numbers are used in a completely different

fashion from the norm.

The system must be completely reconstructed to enable more effective use in preparation for the

future expansion of the mail volume.

Properly speaking, in the interest of efficiency, postal code numbers should correspond with the

mail flow and transportation network. In Mongolia, the network of roads is underdeveloped, however,

the current roads network and administrative blocks which has been naturally and historically

developed will be a good source for establishing efficient postal code system in Mongolia.

The following are some possible methods for assigning postal code numbers:

For the first two digits, in consideration of the mail volume and share in the number of citizens,

will be designed by dividing Mongolia in some geographic area such as

Ulaanbaatar/Darkan/Erdenet/East/West/North/South, Aimags, and Horos in case of Ulaanbaatar. The

following options will be also considered simultaneously.

(a) Following the flow of the existing railway and airline traffic centered around Ulaanbaatar

(b) From east to west (or vice-versa), or from north to south (or vice-versa)

(c) In a clockwise movement centered around Ulaanbaatar

For the last two digits, assignment of numbers in units of Soums based on the method chosen for

the first two digits.

The following is a prospective method for assigning numbers within Ulaanbaatar.

For the second two digits:

* Use of the existing numbers for Horos as current administrative units (this would presumably also

gain the understanding of the residents)

In this case, the numbers now assigned to post offices in Ulaanbaatar as their names would have

to be replaced with other names.

6.4.4. Measures for Restoration of Confidence

One of the factors that is further lowering the rate of use of postal services, which is on an

extremely low level to begin with, is the lack of confidence/trust in them among the populace.

The main causes of this lack of confidence are apprehensions about irregularities (e.g., non-

arrival, damage, missing contents, etc.) and the uncertainty about the time of delivery.

The apprehensions about irregularities are deeply seated. On various occasions, members of the

JICA Study Team were told by interviewees that post offices did nothing in response to complaints.

While reports about irregularities such as non-arrival can sometimes be resolved in accordance

with the particulars in question, they are thought to indicate the presence of fundamental failings or

criminal behavior in the current work. They must be addressed by making a detailed record of the

particulars in each case as well as by in-depth analyses and investigations on an ongoing basis.

Even in countries with well-developed postal services, eradication of irregularities such as non-

arrival is an extremely difficult task.

Japan instated provisions for the handling of complaints about postal irregularities based on this

type of investigative approach, which was established in the United States in the 1950s. Coupled with

reform of the postal service monitoring system, this is at the core of relentless efforts to eradicate the

non-arrival of unregistered mail.

It cannot be denied that, as the focus of postal services shifts from transmission of thoughts to

transport of goods, the incidence of crimes involving postal items in hand will increase. The

prevention of such crimes requires clear establishment of the facts in any such cases through analytical

techniques based on statistical processing and empirical rules, in order to exclude causes.

For general reports (on matters such as education and training, treatment of customers, and

services), measures must be taken not by the person receiving the report (directly from the customer)

but by the person in charge at the post office. The necessary procedures include a record of the

particulars, investigation into the cause, and measures to prevent recurrence. To the same end,

systematic steps must be taken to find solutions that can be uniformly applied throughout the MPC and

will improve the level of the whole enterprise.

For response to expectations for sure and speedy delivery, it is absolutely necessary to ensure that

mail bags stay properly closed and to improve the method of transferring parcels. Partly as a

demonstration of such efforts to the public, it is important to see that the clocks on post office walls

always show the correct time.

6.4.5. Improvement of Treatment of Delivery Personnel

At present, carriers (personnel engaged in delivery) generally use satchels which they obtained

themselves for carrying mail. Even at post offices where the satchels are issued, they have the same

appearance as commercial products, i.e., do not look like official satchels for mail. Similarly, the

carriers are dressed in what looks like ordinary apparel, and observers cannot tell at a glance that they

are carrying mail.

In this area, the MPC must issue uniforms and standard satchels to carriers. This is also important

for building trust in the services and carrier pride in their work.

6.4.6. Handling of Newspapers

When newspapers arriving in post offices in Ulaanbaatar in the morning are taken out in

preparation for delivery, the person in charge first removes the necessary editions (from the many

types) and quantities for each subscriber individually, then notes the address on the top, and finally

hands the stack to the delivery personnel. This procedure is time-consuming and delays the delivery

dispatch.

Ordinarily, three-month contracts are concluded for newspapers. If handed a list of subscribers

within the current term, the person in charge could take out the entire number of copies of each

newspaper needed all at once. This should not cause any significant disruption, and would help to

effect a commensurate improvement in indoor work connected with delivery.

The same kind of time-consuming procedure is performed for distribution of newspapers to post

office boxes. The recommendation for PO boxes is to note the proper editions and number of copies

on the PO box door, for example. This would facilitate distribution and also pose little risk of

disruption or mistaken distribution.

6.5. Transportation Plans

6.5.1. Transportation on Trunk Routes (Between Ulaanbaatar and Aimags)

(1) Transportation by Air

Mail to remote regions of Mongolia is currently transported by air from Ulaanbaatar. Scheduled

flights operated by Mongolian Civil Air Transport (MIAT) between Ulaanbaatar and the main Aimag

centers are used for this. Scheduled MIAT flights all depart from and arrive at Ulaanbaatar; there are

no flights linking Aimag centers to each other, also there is not so much demands in the dramatic

increase of passengers and commodities.

The exact number of flights varies depending on the season. However, nearly all the 31~39

round-trip flights per week on the 16~17 routes to and from Ulaanbaatar are used.

With the exception of certain times of the year, such as the New Year period, there is not currently

a large amount of mail. There is in addition little parcel mail, which can have a major impact on the

weight and volume of mail that can be transported. Considerable capacity is required on flights from

Ulaanbaatar as newspapers are also carried, but inbound flights carry only a small quantity of mail.

Thus even if the amount of mail (excluding parcels) doubles, there should not arise any problems with

regard to transportation capacity.

As noted, however, parcels have a large impact on transportation capacity, and limits on the

maximum weight and volume of individual parcels need to be introduced and implemented.

Increasing the number of flights is apparently impossible, as only 10 of MIAT’s nominal fleet of

20 aircraft are used on domestic routes, and the Antonov AN-24s used domestically are growing

increasingly decrepit. Increasing the frequency of mail transportation would therefore be difficult

using only scheduled flights.

In some areas, there are both air and bus services between Ulaanbaatar and Aimags, and in some

of these areas mail is transported by road (bus) as well as by plane. As the expansion of bus routes in

the future would in some areas enable the transportation of mail on days when there are no scheduled

flights, use of bus transportation should be considered as one option if there arises a need for more

frequent mail transportation.

As those regions where airplanes provide the main means of transport are some 300~1,600km

away, however, use of buses would dramatically increase the time required to transport mail. Without

detailed study of time requirements and service timetables, therefore, use of buses would not

necessarily lead to a reduction in costs and improvement in levels of service.

In areas served by around one flight a week, a hub-and-spoke method could be adopted for

transporting mail to areas served by only around one delivery a week. Thus mail could be flown into

areas with frequent flights, and then sent on by road to surrounding districts with fewer flights. As the

situation stands at present, however, there is no network of scheduled flights and other forms of public

transport to many areas, rendering use of public transport difficult. In such cases, mail would need to

be transported by the MPC itself, a task that would be difficult given the number of vehicles currently

available. Introducing more vehicles for transportation of mail would in addition not have a favorable

impact on earnings in the absence of a dramatic increase in the volume of mail handled.

With regard to transportation by air, there is an agreement between the MPC and MIAT that

stipulates the weight of mail that can be transported.

Although there are not at present any particular problems, an increase in the volume of mail

transported, due for example to an increase in the number of parcels sent, could create a situation

where not all mail could be carried. Consideration should therefore be given to how such a situation

would be dealt with.

(2) Transportation by rail

Mail transported to Aimags by rail is currently transported using regular services operated by

Mongolian Railways (MTZ).

Not all of MTZ’s 89 runs a week on domestic routes are presently used for transportation of mail

(excepting newspapers). Given that there are daily trains on some routes and some are used only for

newspapers, it would be possible to increase the frequency of transportation of mail by rail.

It would thus not be difficult to increase the frequency of transportation in the event of an

increase in the volume of mail handled. There would, however, be a need for more staff if the current

system of having staff accompany mail onboard trains were to be continued. Unlike in the case of

airplanes and buses, it would be physically possible to increase the volume transported per service.

Trains may therefore be said to be a reliable means of transport.

As in the case of transportation by air, bus could be used as an alternative means of transport over

some sections in the north of the country. In most areas, however, there are no competing train and bus

services, making it difficult to substitute one for the other. Bearing in mind transportation capacity and

reliability (such as having a system where post office staff accompany mail), a number of problems

would have to be overcome in order to enable use as a substitute means of transport. As a

supplementary means of transport, though, this option should be considered as one means of coping

with an increase in mail in the future.

(3) Transportation by road

1) Transportation by bus

There are over 110 round-trip long-distance bus runs operating on 48 routes between

Ulaanbaatar and individual regions, and over 50 short-distance runs operating on 22 routes,

but not all of these are used for mail transportation. Areas with considerable demand are

served by daily runs, and some areas have at least two runs a day. In the case of these areas, it

would be possible to increase the frequency of transportation of mail as required. Unlike rail

transport, however, the amount that can be carried per run cannot be increased as long as mail

is carried inside the cabin, given that buses also serve as a means of passenger transport.

However, the bus transportation will provide necessary capacity in the medium–long term

length that is considered in this master plan.

2) Transportation by truck on regular routes

There are currently no regular truck services in Mongolia. This is due more to the lack of

a sufficient volume of demand to make running such services commercially viable than to any

particular obstacles preventing operators from running truck services.

An increase in the volume of freight transported in Mongolia in the future will naturally

lead to an increased in regular truck services. If there exists sufficient demand, naturally more

carriers will enter this line of business.

When regular services are launched, they are expected to form a domestic network

connecting Ulaanbaater and the Aimags in much the same way as existing bus services. If and

when this happens, a priority will of course be to look into the use of regular truck services to

transport mail in place of or as well as using buses as at present.

Even now it is possible to charter trucks, though there is currently insufficient demand to

make transporting mail on a regular basis in this manner a viable option from the point of

view of profits and level of service. Although it would be possible to transport a sufficient

amount of mail if a route were to be established for one truck to serve a number of post offices,

this would not necessarily be particularly efficient given that breakdowns and the increase in

transportation time due to the number of post offices visited would not make the system any

more stable than at present.

3) Transportation by means other than bus and regular truck services

In areas where there are no bus services available, use could be made of chartered trucks

or privately-owned vehicles, other agencies could be permitted to carry mail, or the MPC could

make use of its own vehicles. Use of other parties’ vehicles, however, would require that

detailed contracts be signed and that the reliability of the other party be taken into full

consideration.

The primary problem with using MPC vehicles to transport mail is the cost of doing so. It

is therefore necessary to consider this option after weighing the cost of purchasing and

operating the vehicles against the volume of mail to be transported.

In order to increase revenues from operating MPC vehicles, mail can be transported in

combination with passengers. Normally, however, MPC vehicles are used only for transporting

mail, and the permission of the transport authorities would be required in order to carry

passengers as well. To obtain such permission, the MPC would have to enter and win a tender

against other operators.

6.5.2. Transportation in Ulaanbaatar

(1) Ordinary transport between the central post office and city post offices

Mail is at present transported twice a day—in the morning and during the day—from the

Ulaanbaatar Central Post Office to each post office in the city. As a rule, seven courses are used, one of

which is to the rail station post office and the bus terminal post office.

To reduce the time required for transportation between post offices in the city, it is necessary to

increase the number of courses and to reduce the number of post offices on one course. At present, the

six courses other than the course to the rail station post office and the bus terminal post office cover

six to eight post offices. Reducing the number of post offices per course should reduce the time

required for transporting mail from the central post office to each post office.

Doing so will necessitate the subdivision of existing courses and the creation of separate routes

for post offices near the Central Post Office in the center of the city, and those on the outskirts.

Increasing the number of services will naturally increase operating costs even if there is no increase in

the total distance traveled by vehicles overall. However, the distance traveled per vehicle will be

reduced, dramatically improving the time required for transportation of mail to post offices.

To give one example, one option would be to change the composition of transportation between

post offices. It would also be necessary to amend routes depending on traffic restrictions en route.

Table. 6-11 Proposed New Timetable Between Ulaanbaatar Post Offices Central East West South Terminal

A B A B A B A B CPO CPO CPO CPO CPO CPO CPO CPO CPO ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ 44 20 48 22 24 21 36 31 28 ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ 38 20b 51 32 23 37 53 Ulzit 35 ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ 46 40 49 50 26 25 30 47 CPO ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ CPO CPO 20a CPO CPO CPO 34 CPO ↓ ↓ CPO CPO

Source : JICA Study Team

The increase in the number of trips under the above timetable would require an increase in the

number of vehicles by around three if vehicles on all courses start at the same time as at present. By

staggering departure times, it would be possible to limit any increased requirement for vehicles, but

this would require a major reorganization of operating systems, deadlines and sorting work at the

central post office.

Even considering the state of the roads in the city, vehicles used on urban routes would not

particularly need to be four-wheel drive vehicles or heavy-duty vehicles. And unlike in the Aimags,

vehicles would not need to be capable of transporting passengers, as there would be no need to

function as a means of public transport for carrying people.

(2) EMS delivery vehicles

In addition to ordinary vehicles used for urban transportation of mail, there is also a need to

introduce EMS delivery vehicles to enable the further expansion of international EMS services, which

are currently a major revenue earner. These vehicles would be introduced principally for making

deliveries to customers, and in some cases would also make collections. These vehicles could in the

future also be used for providing domestic home delivery services and new mail services such as mail

with delivery and mail with collection.

One function of vehicles used on urban routes is to improve the image of the MPC. For this to be

achieved, use should be made of standard vehicle livery and markings so as to make vehicles

immediately recognizable as MPC vehicles. Care should also be taken regarding vehicle maintenance

and management.

(3) Transportation between the Central Post Office and airport

There is scope for improvement of transportation between the Central Post Office and airport of

mail transported by air. There are at present generally two runs a day to the airport.

Of these two runs a day, one is for transporting mail loaded on flights leaving in the morning. As

flight departure times are fairly concentrated, this works quite efficiently. Arrivals, however, are much

more spaced out, which creates problems in terms of speed as mail has to be transported to the Central

Post Office by the afternoon delivery or the delivery the following morning.

To reduce the time required for transportation of mail arriving at Ulaanbaatar from each region to

the Central Post Office, it is necessary to swiftly transfer mail that has arrived to individual post

offices in Ulaanbaatar by air, plane and bus. In order to do so, it is necessary to increase the number of

runs between each base post office and the Central Post Office, to operate services to coincide with the

flight schedules and timetables for other means of transport, and to transport mail from the airport to

the Central Post Office at least once every two hours so that it can go on to the next stage.

Unlike vehicles used in the Aimags, vehicles used on urban routes generally only need to be

capable of running on surfaced roads. However, the capacity of vehicles used for departures needs to

be increased to around four tons. For arrivals, on the other hand, the number of vehicles needs to be

increased by one rather than increasing the capacity of individual vehicles. These vehicles can be used

for transporting mail to railway stations performing similar operations.

The table 6-12 is shown one example of how the timing of services can be adjusted so as to

coincide with the departure and arrival times of domestic flights.

Table. 6-12 Timetable for Transportation Between Airport and Central Post Office (Departures) Mon Tue Wed Thu Fri Sat 21:00 CPO 8:00 8:00 ↓ Irkuutsk Irkuutsk 21:30 APT 8:05 8:05 8:05 8:05 8:05 ↓ Bulgan Olgii Tosontsengel Olgii Olgii 22:00 CPO 8:25 8:25 8:25 8:25 8:25 8:25 Ulaangom Hovd Ulaangom Hovd Ulaangom Hovd 8:45 8:45 8:45 8:45 8:45 8:45 Uliastai Choibalsan Altai Uliastai Choibalsan Altai 9:05 9:05 9:00 9:05 9:05 Moron Baruun

Turuun Baruun Urt Moron Bayanhongor

9:20 9:20 Dalanzadgad Dalanzadgad 8:30 CPO 10:30 10:30 10:30 ↓ Beijing Beijing Beijing 9:00 APT

Source:JICA Study Team

Table. 6-13 Timetable for Transportation Between Airport and Central Post Office (Arrivals) Mon Tue Wed Thu Fri Sat 12:00 12:30 13:00 CPO ↓ 13:30 APT 12:35 12:35 ↓ Choibalsan Choibalsan 14:00 CPO ↓ 14:30 APT 12:55 13:10 13:30 12:55 ↓ Moron Dalanzadgad Uliastai Moron 15:00 CPO 13:30 13:40 ↓ Uliastai Baruun Urt 15:30 APT 14:00 14:40 14:00 ↓ Irkutsk Dalanzadgad Irkutsk 16:00 CPO 14:50 14:15 ↓ Tosontsengel Bayanhongor 16:30 APT 15:30 15:30 ↓ Altai Altai 17:00 CPO 17:30 CPO ↓ 18:00 APT 16:30 16:50 16:05 16:50 16:50 16:30 ↓ Beijing Olgii Baruun

Turuun Olgii Ulaangom Beijing

18:30 CPO 16:50 16:55 16:30 16:55 16:50 Ulaangom Hovd Beijing Hovd Olgii 19:00 16:50 16:55 Ulaangom Hovd 19:30 CPO ↓ 20:00 APT 19:05 ↓ Bulgan 20:30 CPO 21:00

Source:JICA Study Team

6.5.3. Transportation in Aimags

Although there were in the past aircraft for transporting mail from Aimag centers to Soums and

Bags, there at present no such special mail planes. Moreover, the only Soums with regular flights like

those between Ulaanbaatar and each Aimag center are Tosontsegel, Baruun Taruun and Hovd Bulgan.

With the exception of the railways in some Aimags, there are hardly any means of transport from

each Aimag center to the Soums other than MPC vehicles. These MPC vehicles, the majority of which

are operated by the post offices in each Aimag center, make around one to three trips a week.

Because of the absence of alternative means of public transport in most areas, it would be

possible to increase the frequency of transportation (MPC vehicles also serve as a means of public

transport and carry passengers) by improving, for example, operating methods within the MPC. In

actuality, the question of whether there is sufficient mail to warrant an increase in services needs to be

taken fully into consideration.

One point that needs to be considered in conjunction with this is the relationship with the

frequency of transportation from Ulaanbaatar to the Aimag centers and from the Aimag centers to the

Soums. Even where there are at present three deliveries a week from Ulaanbaatar, there is in some

cases only one deliveries a week from Aimag centers to Aoums. Prompt consideration needs to be

given to what action should be taken with regard to such areas.

Despite some regional variation, there is not currently a shortage of vehicles in all regions, and it

should be possible to increase the number of transportations in some areas without increasing the size

of the current fleet. Throughout the country, however, vehicles are aging and operating ratios are

declining.

In particular, given the state of the roads in the Aimags, vehicles need to be durable and capable

of traveling over difficult terrain, and replacement of expendable parts may well increase in frequency.

The view seems to be that vehicles need to be capable of carrying passengers, particularly where

there is competition from other vehicles carrying passengers in Aimags where there is a high level of

movement among residents.

Considering the volume of passenger demand and the state of the roads, there is a need to look

into what steps can be taken in some areas (including, for example, modernizing and increasing the

capacity of vehicles).

6.5.4. International Transportation of Mail

(1) Zamyn Uud

1) Vehicles for transportation use

Cross-border transportation of mail between Mongolia and China is performed on a

rotating basis by the postal authorities. The vehicles used on the Mongolian side are aging and

cannot carry large amounts, and as a consequence it is sometimes impossible to transport all

mail bags without making several round trips when there is a large quantity of mail. This is of

course not good from the point of view of cost and efficiency.

To handle mail more efficiently, it is necessary to introduce vehicles with a capacity of

four tons. In order to prevent damage to mail, vehicles should at the very least have airtight

mail compartments. If roll box pallets are to be used, then consideration should also be given

to equipping vehicles with power gates.

2) Improvement of temporary warehousing facilities

Old 20-foot containers located in the railway freight handling area are currently used for

temporary warehousing of mail transported between Mongolia and China during the interim

between transfer from automobile transport to rail transport. Located in the middle of nowhere,

they are difficult to manage. They are in addition sited on ground that is a level lower than the

platform, which makes loading and unloading more difficult.

Providing warehouses in the rail freight handling facilities would remedy this situation.

As local post office resources are insufficient for this purpose, action needs to be taken by

MPC head office and by the State.

If this is impossible to achieve in the short term, an agreement could be signed with the

MTZ providing space for warehousing next to freight handling facility buildings.

As shown in the figure 6-21, there is some facilities for handling freight in the Zamin

Uud station, however it is not utilized to mail handling. There will be no change in the

distance between trucks and a train, there will be some meaningful improvement of safety and

reliability of handling mails.

Figure. 6-21 Status and Future Image of Mail Handling in the Zamin Uud Station


Current system

TrucksContainers for temporarystorage

Train Zamin Uud Station

Zamin Uud StationTrain Trucks

Facility for handling mails

Example of future system

3) Improvement of conveying equipment

At present, mail is carried by postal workers in mail bags from temporary warehouses to

vehicles for loading. In order to prevent loss and damage of mail, it is necessary to introduce

the use of conveying equipment. If the above warehousing problem can be solved and

warehousing facilities put on the same level as the platforms, handcarts can be used for

carrying mail.

4) Reconsideration of relations with the MTZ

There are at present no contracts between the MPC and MTZ concerning temporary

warehousing facilities in Zamyn Uud. The situation in Zamyn Uud, which is an important node

in the transportation of mail between Mongolia and China, is wretched. At the least, the MPC

needs to convey its requirements concerning these facilities to the MTZ or MOI, and not leave

dealing with the MTZ to the post offices on the ground.

(2) Ulaanbaatar

1) Transportation from stations

The majority of mail from overseas arrives at Ulaanbaatar Station by rail via Zamyn Uud

from China. There are few trains from Zamyn Uud, and the process can be speeded up by

timing trips to coincide with the arrival of trains. The volume of mail from China is frequently

large, making it necessary to provide handcarts for transferring mail from freight cars in the

station yard to post office vehicles.

This is difficult with current facilities. It would, however, be possible to use roll box

pallets by ensuring that work areas in the station yard are all on the same level, especially for

newspapers and international mails.

2) Non-MPC factors

In addition to normal transportation requirements, international mail must also go

through customs. In Mongolia, customs officials are stationed permanently at the Central Post

Office for this purpose, but they are insufficient in number when there is a large amount of mail

to inspect. The number is small compared with the original quota of personnel.

The number of customs officials needs to be increased, and this requires the support of

outside agencies such as the MOI.

6.5.5. Reduction of Transportation Costs

(1) Public transport agencies

The MPC presently has contracts with the MIAT, MTZ and ATD that lay down transportation

charges and transportation conditions. Due to the fact that there is only one company providing each

means of transport and there is no competition through contracts with other organizations, it is

extremely difficult to judge whether these charges and conditions are appropriate.

In the case of transportation by air, charges are normally calculated depending on the weight of

mail and distance transported. In the case of rail transportation, however, passenger seats have to be

constantly blocked off, and so a flat charge is paid regardless of the actual quantity of mail transported.

Likewise, the unit charge for transportation by bus is determined by distance (per kilometer), and a flat

charge is levied for transporting any quantity of mail up to a certain maximum weight.

The charge structure used for rail and bus transportation is to the MPC’s advantage if the same

volume of mail is transported as at present. If the volume increases, however, it will be necessary to

confirm that this system will continue to be used.

(2) Transportation by MPC

Standards (on distance) are laid down by the State concerning the consumption of expendable

supplies for vehicles, and parts replaced before the specified distance has been traveled must be paid

for out of pocket. These standards are the same for all areas and are uniform for each type of part.

However, the cost of replacing such parts leads to an increase in costs.

The cost per item of mail is high given the current volume of mail transported, and would be

difficult to bring down even with a several-fold increase in the volume of mail carried.

The reasons for not being able to reduce costs are the lack of choice due to the limited means of

transport available, and the lack of competition in the transport market.

6.5.6. Transfer of Mail

(1) Improvement of handling

Loss and damage of mail in transit can reduce confidence in the postal system. That this is so is

clear from the handling of mail bags used for transportation of mail at present. Mail sorted at

individual post offices is handled in mail bags, which are sometimes dragged by hand due to the

shortage of easy-to-use equipment. Loading and unloading from vehicles are also generally performed

by hand.

It would be difficult to speed up the transfer of mail from vehicles to trucks with the current

number of handcarts in use, even given the use of elevator conveyor equipment for loading and

unloading of mail at stations. It is therefore necessary to consider introducing the use of powered

conveying equipment and increasing the number of handcarts.

The loading and unloading of mail bags by hand can easily result in damage to mail, and makes it

difficult to improve operating efficiency. One solution would be to load mail bags onto small

containers and roll box pallets so as to be able to load mail in larger batches (i.e. by container or pallet

rather than individually) and speed up the loading process.

6.5.7. Delivery to Bags

(1) Overview

It should be noted that delivery to Bags is already implemented to an extent, using traffics

between the Soum centers and Bags. Mails are entrusted to those people to be delivered. Considering

the mail volume, this is a cost effective and well working system, without becoming a burden to MPC.

MPC should first try to collect various efforts and experiences that are taking place at each area, and

try to pick a good practice to be introduced all over the country.

(2) Delivery by MPC Vehicle

To handle all the bag delivery by MPC’s own resources alone would be a very difficult

undertaking. As MPC has already calculated, to realize this through MPC owned vehicle and staff

would be totally impossible. It would mean securing vehicles for each Soum. Current transportation

cost would be more than doubled, without any increase in the revenue. Further, only one Bag per day

can be served. Soum must hire additional delivery personnel to cope with 4-5 Bags within each Soum.

These additional expenses would immediately drive MPC into the red, unless MPC can secure at least

120 additional mail items to deliver. The basis for the calculation is as follows;

Average distance from a Soum center to a Bag: 60km

Fuel Cost: 80Tg/km

Total Fuel: 4,800Tg

Depreciation and other cost: 26,000Tg

Labor Cost 5,000Tg

Total Cost for Delivery: 36,000Tg

Mail Revenue per item: 300Tg

Necessary Mail Volume per Delivery: 120 items

Currently, mails to Bags are extremely scarce. Even including various subscription, many

residents of Bags simply do not have any postal communication with the outside world. Even in some

of the active Bags, and even including publications, the number of items per month is about 20 at the

maximum, 2-3 on the average.

Considering this situation, the delivery to Bags using dedicated vehicle is totally unthinkable.

Combining Bags to increase efficiency would be difficult due to road conditions. Therefore, it must be

concluded that this is impossible. Unless the government is willing to provide huge subsidies for this

purpose, this is clearly not an option for MPC.

(3) Delivery by Part Time Hire

Another possibility is to hire a person (or several person) that already owns some means of

transportation, whether it be a automobile or a horse, in each soum to make deliveries to Bags on a

part time basis. Based on the GDP per capita of US$420,US$5 per delivery would be reasonable. In

order to cover this, however, about 20 mails per delivery is needed to justify this cost.

This is a level that may be justifiable in some cases, since this level of mail volume does exist in

some of the Bags. Further more, this idea has the additional advantage of a low (zero) capital

investment, flexible cost structure. However, even this would be difficult under the current mail

volume.

(4) Possible Strategy

Therefore, in order to implement Bag delivery at the moment, there are three things that MPC

should consider.

1) Base the delivery on part time hiring of delivery staff

Practically speaking, owning a vehicle for delivery at the Soum level is out of the

question unless there is some huge subsidy (which is unlikely). Even if the vehicle were to be

given, the fuel cost would be too high to provide this service. Therefore, hiring the delivery

staff that already owns some means of transportation would be the only option.

2) Charge for Bag Delivery

It should be noted that it is very unlikely for this service to pay for itself. Therefore, for

the time being, it would be wiser to discourage the use of such service. The fee would probably

not be able to recover the cost of delivery at any rate. However, charging a fee for this delivery,

and making it prohibitively expensive would fend off actual use. How to set this charge is

difficult, though, since in the long run, we would need to encourage the use of mail. The

balance needs careful consideration.

3) Do not attempt full immediate implementation

Implement from areas with large enough mail/subscription volume, where there are more

than 20 items per month. Do not make major announcements. This strategy can be used as an

alternative to the above, or as a complimentary effort.

4) Make the delivery staff into a viable sales force

The delivery part timers should be encouraged to solicit usage of mail and subscription.

Their pay structure should be part fixed, and part based on the amount of items that they deliver.

Efforts such as group subscription of a single publication should be encouraged. Delivery part

timers would probably have some knowledge about the potential communication needs of the

residents of each Bag, which should be exploited.

The difficulty in Bag delivery would be to strike a balance between discouraging its use and on

the other hand promoting use. This needs to be adjusted, and the strategy may differ from Aimag to

Aimag, or even between Soums. In the long run, it would be possible to cross-subsidize the Bag

delivery from the revenue generated from Ulaanbaatar. Till then, Bag delivery, if it is going to be

implemented in the near future, needs to be implemented in a rather toned down fashion, in order to

contain costs. Otherwise, it would either destroy the foundation of MPC through excessive costs, or

would require a complete change of the role and position of MPC as an independent self supporting

entity.

(5) Conclusion

It is clear that whatever method, the Bag delivery is an extremely difficult challenge for MPC.

Hastily introduction would be very risky. Therefore, the best method would be to utilize the existing

practices and learn from it, thereby improving the existing delivery to Bags. MPC should focus on the

level of traffic instead of the level of jur isdiction, in order to focus on their main activity of moving

mail.

6.6. Plans for the Organizational Setup and Human Resource Development

6.6.1. Organizational Setup

(1) Current Status

The MPC is under the jurisdiction of the Ministry of Infrastructure (MOI), and is owned by the

State Planning Commission (SPC), which is in charge of appointing its director-general and approving

its budget. In Ulaanbaatar, it operates the Central Post Office, 18 other post offices, and a quasi-

central post office. Outside Ulaanbaatar, there are central post offices in the 21 Aimags and the city of

Baganuur, and 317 post offices in Soums (including commission contracts). The head office in

Ulaanbaatar is in general charge of all postal services nationwide. At the Aimag post offices, the heads

and accountants appointed by the head office oversee the post offices in Soums in their respective

Aimags. In 1999, the MPC employed 270 at its head office and post offices in Ulaanbaatar, 320 at

Aimag post offices, and 370 at Soum post offices, for a total of 960.

(2) Issues

With a view to leading postal services in Mongolia to success, the organizational capacity of the

MPC was analyzed from the standpoints of A) the clarity of the division of authority and roles, and B)

the incentives (another factor to determine the organizational capacity is analyzed in 6.5.2). This

analysis revealed the following problem areas.

1) The clarity of the division of authority and roles

A) The MPC director-general and deputy director-generals make decisions on all matters.

The general managers, including leaders on the order of section head, are not given the

authority to approve things themselves. In other words, this arrangement does not exhibit

the usual division of roles whereby the top layer is in charge of management, and the

general managers, of administration.

B) Following the reorganization of March 2000, the first deputy director-general also in effect

served as leader of the human resource and administration group, and the second deputy

director-general, as leader of the postal network group. However, the (first) deputy

director-general duties were not reduced as a result of the reorganization. In this way, duty

items that should be left to the lower levels have been assigned to the top.

Figure. 6-22 Aimag and Soum's Post Office

Figure. 6-23 Organization Chart of MPC

Arhangai 16 employees

19 soum’s Post office

Bayan-Oligii 18 employees

Bayanhongor 16 employees


Bulgan 13 employees


Gobi-Altai 15 employees


Darkhan-Uul 16 employees


Dornogobi 16 employees

16 soum’ Post office

Dornod 15 employees


Dundgobi 12 employees


Zavhan 13 employees


Orhon 15 employees


Ovorhangai 16 employees

19 soum’s post office

Omonogobi 17 employees


Suhbaatar 14 employees


Selenge 12 employees


Tov 14 employees


Uvs 19 employees


Hovd 19 employees


Hovsgol 18 employees


Hentii 14 employees


Govisumber 10 employees


Baganuur 7 employees


Source: MPC


Administrative Division of Headquarters

　　　　　　　　　　　　　　　　　　

Director GeneralCouncil

Director General

FirstDeputyDirectorGeneral

SecondDeputyDirectorGeneral

Human resource &AdministrationDivision

EconomyDivision

PropertyDivision

Postal Operation& InspectionDivision

Office-SupportDivision

Somon PostOffice

PublicationDivision

Mail Order Division

UB City Post Office

Drivers

Newspaper DistributionDivision

Central Post Office ServiceDivision

Special Delivery Mail &Parcel Sorting Division

Letter & Document SortingDivision

Newspaper OrderDivision

Source: MPC

Postal ServiceDivision

Aimag PostOffice

B) There is a lack of conformance between the rules for executive posts following the

reorganization and TOR for each managerial post (the TOR, which should have been

revised along with the reorganization, were left as they were). As a result, there is a lack

of agreement between executive and managerial duties, and some work items are not

being executed.

D) The abolition of executive posts and accompanying reallocation of duties after the

reorganization caused considerable variation as regards the burden of work in

administrative posts.

2) Incentive

At present, the MPC evaluates employee performance every quarter and reflects the

evaluation results (ratings) in quarterly bonuses (which are paid in amounts up to the

maximum monthly amount). At the end of the fiscal year, the wage level for the following

year is a subject of evaluation. In certain Aimags, Soum post office heads who have

succeeded in boosting sales are given a free trip by way of reward. Nevertheless, the

standards of evaluation are not disclosed, and employees are merely notified of the results by

their superior. As such, the system is not fully acting to heighten employee morale and spirit.

One piece of evidence to this effect is the expression of dissatisfaction with the level of basic

services at the MPC by the respondents to the customer questionnaire survey conducted by the

JICA Study Team.

(3) Measures I － Perspectives on resolution

The reorganization of the MPC head office in March 2000 was aimed at improving the

organizational capacity by introducing a flat system into line management. The process is described as

follows. The former organization had five sections with just under 30 administrative staff. The reform

of the head office organization was aimed at abolishing this layer of section heads and building a

scheme in which the first and second deputy director-generals could directly supervise all

administrative posts (see Figure 6-23). In reality, however, the problem is that a single manager can

fully manage the work of no more than somewhere from five to ten subordinates. As such, the current

situation in which executives at the top are each in direct charge of numerous subordinates holds the

risk that management of much work will lag in areas other than those of most immediate concern. As

viewed from the standpoint of subordinates, direct connection with the top layer in possession of all

authority is liable to lead to communication that amounts to nothing more than asking for instructions,

and would not provide incentives for execution of work with a sense of individual responsibility.

Figure. 6-24 Reorganization in the MPC Head Office Line (March 2000)


Figure. 6-25 Advisable management setup

To have the flatter organization function effectively, action must be taken on the following points.

1) Delegation of authority

�

��

Layer 2

Layer 1

Group A members

Sales planning group Sales promotion group

� Director General, Deputy Director

� Group B leader Group A leader

�� Group C leader

Group B members

Group C members

Layer 1

Layer 2

Layer 3

� Before the reorganization

Director General, Deputy Director General

� � � Section A head

��～� Section A employees

Section B head Section C head

��～� Section B employees

��～� Section C employees

Layer 1

Layer 2

� After the reorganization

Director General, Deputy Director

� � Group B leader Group C leader

��～� Former Section A employees

��～� Former Section B employees

��～� Former Section C employees


The authority in question is the right of approval on the line. As pointed out in 6.5.1(2)

1) A) and B), the MPC has not made a clear division between management and administration,

and the right of approval is concentrated in the top layer. To correct this situation demands the

erection of a setup enabling the top layer to concentrate on management. In other words, the

right of approval for administrative matters (excepting those directly connected to

management) must be delegated to the group leaders, as far as possible. For example, group

leaders could be allowed to decide matters such as the following entirely at their own

discretion.

・ Expenditures in amounts below a prescribed ceiling

・ Division of duties in the group and coordination of member schedules (vacations,

etc.)

Furthermore, it would be advisable for the group leaders not only to make oral

presentations of the state of progress and measures in the work under their control at internal

meetings but also to submit written reports in prescribed forms. This is because an increase in

group leader accountability related to internal procedures will enhance the transparency of

decision making.

2) Review and reallocation of service issues

With the respect to the points in 6.5.1 (2) 1) C) and D), the current situation of each

managerial duty should be considered as urgent. In a review, it is necessary to understand

how the managerial duty items, which are determined by managerial authority regulations,

and the work items, which are determined in employment contacts, are actually fulfilled. In

addition, managerial authority regulations and employment contracts should be reviewed

based on actual situations, which distribute the duties equally (a system of payment, which

reflects the amount of duties borne) through the reallocation of duties and allocate new duties.

3) Review of performance evaluation

With respect to the points in 6.5.1(2) 2), the existing performance evaluation system in

MPC should be improved as follows:

In evaluations, it is important to establish clear standards and disclose them to the

employees, and also to allow employees to rate their own performance and have the

opportunity to discuss this rating (along with the superior's rating) with the superior.

The key factor in incentives is not the size of the reward but the sense of satisfaction felt

by employees when they realize that their performance is being properly evaluated.

(4) Measures II – Organizational capacity improvement

The details of measures, which the central organization and local organizations should take for

MPC organization capacity improvement are suggested as follows:

1) Central organization

A) Group management

The existing line management at the MPC is extremely distinctive. There is an

unavoidable impression that the pre-reorganization sections have merely been replaced by

groups, and the section heads, by group leaders. With its more flexible operation, the

group system can make more effective use of limited human resources. For example,

members may belong simultaneously to more than one group as the work demands, and a

member of one group could even be the leader of another (see Figure 6-25). It must be

understood that the groups are formed not for the purpose of executing functions in the

line but for attainment of given tasks.

There is one major prerequisite for flexible operation of the group system in line with

the above: continuation of the necessary support and follow-up work upon clarification, by

the top layer, of the group mission and period of activity.

If it is to provide services that meet the needs of customers, the MPC should add

several capabilities (in the form of groups) to the current organization, as follows.

a. Personnel training group

Postal services depend greatly on human resources, and the quality of human resource

development will have a big impact on the business result. The provision of training for

the slightly under 1,000 employees will call for capabilities for the following kinds of

activities.

・Administration (training program planning and evaluation)

・Guidance (lectures and practical training)

・Development (preparation and revision of programs and guidance)

These activities must be promoted through collaboration by the persons in charge of

training in the human resources & administration group positioned below the first deputy

director-general and the members of the operation and services group.

b. Sales planning group

To provide new customer-centered services, the MPC must ascertain customer needs,

review the existing services, develop the right new services, and promote them. The

determination of needs must not be limited to quantitative and qualitative market surveys;

it must include inquiries and complaints received at post offices as the points of contact

with customers. These latter are vital sources of information. Similarly, the review of

existing services and development of new services should not be left exclusively to the

managers in the head office; it might be advisable to have it assigned to an ad-hoc team (of

female employees?) at the Central Post Office, for example. Because of the direct linkage

with MPC management strategy, activities should be conducted under the jurisdiction of

the director-general.

c. Inspection group

At present, the setup for internal inspection in the MPC is as follows.

・Inspection of postal services is under the charge of the operation and services

group.

・ Inspection of inventories at the Office Support Division in the head office

organization is under the charge of the leader of the property registration group.

・Inspection of accounts at Aimag post offices is assigned to the accountants in the

human resource and administration group.

Coupled with the external surveillance by the watch-dog agency, the setup for

inspection of the MPC is in order as far as the system is concerned. However, to maintain

its competitiveness over the long term, the MPC must obtain and keep the trust of

customers by bolstering its capabilities for crisis management in the event of injustice or

irregularities. To this end, it must increase the inspection-related authority and, at the

same time, make arrangements for centralization of information and its timely provision

directly to the top layer. For this reason, it should consolidate the inspection work, which

is currently spread among different principals, into a single group, and place this group,

together with the legal advisors attached to the human resource and administration group,

directly under the director-general.

Recovery of customer confidence will also require restoration of the system of

inspectors in charge of examining irregularities (which posts were abolished by the March

reorganization) and preparation of mechanisms for swift response to customer requests.

d. Document management group

The MPC is currently making efforts for sharing of information and the corporate

vision through smooth communication among employees. More specifically, it holds

regular meetings for managers, quality control conferences for employees of post offices

in Ulaanbaatar, and conferences for the heads of post offices from Aimags around the

country. Efforts should also be made for the conversion of in-house information and

capabilities into documents. The preparation of information in written form can be

expected to clarify in-house responsibilities and authority, and so lead to an improvement

in the level of internal inspection and reinforcement of the setup for internal management.

It can also be expected to help to elevate the level of services and, by extension, increase

the degree of customer satisfaction. In addition, seeing that the MPC is the entity assigned

to provide universal services, it can also be noted that such documentation will help to

ensure accountability to the higher administrative authorities. For these reasons, the MPC

should clearly establish policy on compilation of information in document form, institute a

group to monitor this compilation under the first or second deputy director-general, and set

about the related activities.

B) Group activity

There are various prospective tasks for the MPC to address in keeping with its aim of

ensuring long-term competitiveness and increasing the degree of customer satisfaction

through a rise in the level of services. It would be advisable to form groups that cut across

internal boundaries for the promotion of studies under the direction of the director-general

and proposal of requisite measures. The following topics can be cited as examples.

a. Developing national culture of hand-written correspondence

E-mail is anticipated to find widespread diffusion as a means of communication.

Under these circumstances, the MPC must identify value that only postal services are

capable of delivering and take steps to promote it. This effort would assist the promotion

of postal services. In Japan, post offices are at the center of campaigns to promote letter-

writing by means including the formation of letter-writing groups in the community and

local schools. They are also actively developing postal products (stamps, etc.) that

encourage exchange of letters by individuals.

b. Improvement of the work environment (point of departure for cultivating the

organizational culture)

・To boost employee morale, it is important to improve the work environment. Activity

to this end may be exemplified by the measures taken by the Arvaiheer center post

office in the Aimag of Ovorhangai, where employees who work the counter wear

uniforms and name plates. A high morale is also important for preventing irregularities

and mistakes as well as increasing the degree of customer satisfaction.

・The MPC should arrange the work space so that its emblem (logo) is always in the

eyes of not only the customers but also the employees. With their visual appeal,

emblems act as a backbone for sharing of the mission and action toward its attainment

on the part of the employees.

・Proper arrangement and conditioning of the work space is one of the basics in all kinds

of work. Nevertheless, efforts in this area could be negated if employees transplant

their own habits into the work space. In Japan's manufacturing industry, companies

systematically arrange and condition the work space as the starting point of

productivity improvement.

c. Breeding of an organizational culture that respects communication

To increase productivity, it is also important for the MPC to promote a sharing of

information. Group activity would run across boundaries in line management and promote

information-sharing by breaking down interdepartmental sectionalism. However, there is

some question about the degree to which information-sharing can be deepened and new

value can be created. In this connection, studies must be made to determine the right

approach on the level of routine communication and discussion among employees.

As the fundamentals of action, Japanese organizations stress the importance of

reporting, notifying, and consulting. The proper practice of these three elements elevates

the significance of information-sharing from the level of sharing mere facts to that of

sharing goals, and further to that of sharing outlooks and conditioning the management

setup through information. Discussion serves as the means of information-sharing and the

pooling of knowledge to reach solutions for given problems. Discussions could be

effectively pursued by establishing rules in advance and making use of aids such as

whiteboards and cards.

d. Breeding of an organizational culture that respects documentation

The following can be cited as tasks for documentation that must be addressed at the

initiative of the document management group.

・The group must clearly state the scope of document management and promote the

sharing of information through documents. The specific tasks here are as follows.

- Determination of the kind of documents that must be stored, and the place of storage

(need for locked storage, etc.)

- Establishment of standards for discarding documents

- Establishment of a storage procedure facilitating reference (storage in files using serial

numbers, etc.)

- Preparation of internal documents in fixed forms corresponding with the type of use

In order to give as many employees as possible access to materials acquired through

overseas training programs, for example, the MPC should establish a document room for

loaning documents to employees.

・The MPC should publish a regular in-house newsletter. The newsletter would carry

features on cases of improvement being made at various post offices, awards for

outstanding achievements, and information including instructions from the head office, to

be relayed directly to all employees, right down to the level of those in Soums.

・The preparation of work manuals must be promoted on a companywide scale. Through

coordination with all concerned parties, the MPC has already prepared a rule book setting

forth postal work. It also must prepare manuals with clear explanations of procedures

that will be understandable even by employees in Soums on their first day on the job.

The following are key points in manual descriptions.

- Explanation of work procedures with illustrations and figures

- Avoidance of use of scholarly and legal terminology as far as possible

- Match with the actual circumstances at post offices in Aimags and Soums

In addition, manuals should be prepared not only for actual postal work but also for

the work in managerial positions at the head office. This is because the presentation of

all work in manuals will eliminate the necessity of having any particular employee

assigned to any particular post, and thereby make it possible to post employees freely and

flexibly. Furthermore, the process of preparation will assist discovery of needless work

procedures and so help to streamline work.

e. Breeding of an organizational culture that respects customers

The sales activities promoted at the initiative of the sales planning group must be

based on the premise that all employees are salespersons. This approach has two focal

points. One is the promotion of a campaign to win customers as necessary for the

widespread diffusion of the "Pigeon" services under study for future introduction. The

other is a rigorous campaign to improve services in accordance with the "customer-first"

orientation, in order to build and maintain a long-term competitiveness.

The sales activities must make it clear that the MPC's mission lies in provision of

customer-first postal services, and see that this stance is put into practice through the new

"Pigeon" services. For this purpose, each and every employee should, in addition to his

or her daily routine, act as a salesperson and attempt to win customers through visits to

government offices, companies, and private homes. Along with its nationwide network,

the MPC's key advantage relative to competing carriers is its great number of employees.

It should aim for service improvement in quantitative terms by having all employees be

involved in the sales campaign for "Pigeon" services.

For this purpose, all employees in the head office and post offices must be instilled

with a customer-first attitude and exhibit it in treatment of customers and efforts to

improve the routine work. A campaign of this sort would aim at service improvement in

qualitative terms and maintenance of competitiveness in the marketplace. The

questionnaire survey conducted by the JICA Study Team on customer needs yielded a

detailed picture of the target post office supplying the kind of services wanted by

customers. The MPC should clarify the differences from the actual post office of today

and mount an ongoing campaign to fill the gap through patient work by all employees.

2) Local organizations

The heads of the Aimag (center) post offices are appointed by the MPC director-general

and conclude employment contracts that are renewed annually. They are given a fairly great

discretionary power in the operation of postal services in their respective Aimags, in matters

including appointments and the setting of salary levels at Soum post offices. It can also be

noted that the Aimag post offices employ less than ten excluding the vehicle drivers and

guards, and that the corresponding number on the Soum level is one. As such, the capabilities

of post offices in Aimags may basically be equated with the level of competence (or

motivation) and expertise on the part of the post office head and employees.

Based on these considerations, one of the key measures for improving the balance of

payments at Aimag post offices is employment of the best available personnel through

application of annually adjusted contracts. The MPC must also look into incentives to

heighten employee motivation (such as measurement of performance with reference to the

degree of attainment of targets) and training to boost levels of expertise. The achievements of

outstanding post office heads and employees should not only be discussed at national

conferences of post office heads and in training programs for employees in Aimags but also

publicized nationwide through the newly instituted in-house newsletter. The director-general

should instruct the incorporation of successful practices into other Aimags and have the sales

planning group monitor the subsequent progress.

The employees of Soum post offices are not very pressed with postal work except after

the one or two deliveries of mail from the Aimag center. In August 2000, the director-general

issued instructions to the effect that wages for these employees would rise with the turnover

(volume). This was done to give them more incentive for active promotion of sales during

their free time. For the future, the MPC might also consider replacement of full-time

employees with employees hired on a commission contract basis or as vehicle drivers,

particularly in Soums with little demand for postal services.

(5) Plans for the organizational setup

The plans in the aspect of the organizational setup should basically be set in motion no later than

2005, when "Pigeon" services are anticipated to commence. The new organizational culture described

above must have taken root by the time of provision of the new services.

(6) Proposals on Organization

Delegation of Authorities

Management and administration are not clearly separated in the organization of MPC, but the

authorities of approval are centralized on the top management. All of the matters for approval come to

the three top executives. Even the matters to be approved by middle management or group chiefs go to

those three top executives. It is, therefore, necessary to change the current situation so that the top

management can devote themselves to the management matters. For this purpose, it is necessary to

delegate the authorities to approve the matters concerned with the administration except those

connected directly with the management as much as possible to group leaders.

In the central organization, it is recommended to reform as follows: first, the authority of group

management must be defined. Though the group management system has been introduced, we cannot

wipe out a thought that the names of sections were only replaced by those of groups and the section

chiefs by the group leaders. For MPC to provide its services responding to the user needs, it is

desirable to strengthen the function of group management.

Specifically speaking, the reform planning of organization should be implemented at least two or

three years before the year 2005 when pigeon mail services are scheduled to start. It is particularly

necessary to render the proposed new services under the organization where a new organizational

culture has been settled. For example, Sales Planning Services should be reorganized. It is necessary

for the Sales Planning Services to grasp the customer needs, address the review of the existing services

and the development of new services, and promote the results obtained therefrom. If independence and

delegation of powers are provided to them in reviewing the existing services and developing new

services, it would produce good planning and make them active, which will raise the success rate of a

business.

The above can be applicable to Personnel and Education Group. The group leader in charge

should be responsible, and delegated the authority, for performing the works comprising 1)

management work covering the planning and assessment of training, 2) guidance work covering

lectures and on-the-spot training, and 3) developmental work covering the preparation and revision of

training and guidance materials.

First Deputy Director General

Second Deputy Director General

Director General

Director General Council

Economic Planning & Banking Group

Sales Planning Group

Inspection Group

Postal Operation Group

Postal Service Group

Garage

Newspaper Distribution Division

Newspaper Order Division

Special Delivery Mail & Parcel Sorting Division

Letter & Document Sorting Division

Central Post Office Service Division

UB City Post Office

Office Support Division

Mail Order Division

Publication Division

Aimag Post Office

Soum Post Office

Group Management

Personnel Training Group

Property & Accounting Group

Document Management Group

Human Resource & Administration Group

Figure. 6-26 Proposed Organization Chart of MPC

6.6.2. Human Resource Development

(1) Current Status

A variety of human resource development efforts have been made for the postal office staff to

understand the services in MPC. The central office has dispatched managers to special courses in

external organizations and conducted training programs by external instructors to gather updated

information and expertise for postal services. The local offices are training staff for the operation of on

time postal services. The human resource development details, which are divided into training and

OJT, are shown as follows.

1) Training areas

A) Training in other countries

・Each year, the MPC sends two employees to take part in the postal training program

conducted by the Asia -Pacific Postal Training Center (APPTC, located in Bangkok). The

training is for those in administrative positions.

・The MPC also invites instructors from the APPTC to make presentations related to training

for those in administrative positions.

・It sends employees to take part in training programs conducted by the Ministry of Posts and

Telecommunications in Japan.

・The heads of Aimag center post offices (in Darkhan, for example) accompany missions to

Germany for the purpose of inspection.

B) Head office

・Training is provided by external instructors (on a non-regular basis).

Examples:

- Five-day course of training on the economy, postal operations, new sales, and banking

services

- Two-day course of training for employees of Ulaanbaatar post offices in various fields of

expertise

・ The MPC sends employees to take part in special courses conducted by external

organizations.

Examples:

- Dispatch of six employees to the training course in finances conducted by the Ministry of

Finance

- Dispatch of employees for special courses at economics universities, courses in financing

at private graduate schools, and short-term language courses at liberal arts universit ies.

C) Aimag post offices

・The MPC holds conferences for the heads of Aimag post offices throughout the country (for

three days every February). The conferences include the following instructional activity: a)

presentation of any changes in related laws/regulations and work, b) explanation of ways of

stimulating human resources, and c) reports on the current international political and

economic situation.

・The MPC holds conferences for accountants at post offices throughout the country (for

about three days once a year). The conferences include the presentation of new software

for financial analysis, etc.

・The MPC dispatches employees outside the Aimag for training.

Examples:

- Dispatch of accountants for training at specialized institutes in Ulaanbaatar

- Dispatch of employees in charge of banking services to Ulaanbaatar for three-month

training courses

D) Soum post offices

・Aimag center post offices hold conferences for Soum post office employees (for about three

days once a year). The conferences include the following instructional activity: a)

presentation of any changes in related laws/regulations and work, and b) presentation of

banking services and other new services.

・The MPC arranges programs of training by head-office specialists. The head office

dispatches these specia lists to provide training on subjects requested by Aimag post office

heads (such as postal operations). In addition, the operation and services group,

planning/economy/banking and financial service group, and property registration group

conduct practical tests in the Aimags once every three years, and provide training at the

same time (for about two days). In the area of remittance services, training is provided by

personnel from the MPB using manuals. Furthermore, when visiting Soums, personnel in

charge of accounting at Aimag post offices furnish counterparts at Soum post offices with

guidance.

2) OJT

On site training is conducted about once a week for newly assigned staff.

(2) Issues

MPC organizational capacity depends on the expertise level of staff. The expertise is determined

based on a human resource development policy and training details. The issues of the existing human

resource development policy in MPC are pointed out as follows:

1) Training

A) Since there are financial restrictions for training overseas, staff members are dispatched to

training programs, in which course fees are exempted by APPTC. Staff members, who are

fluent in English, are eligible to participate in the training programs. The number of

eligible staff for dispatch is limited. Under the current system, the needs of the

participating staff are not completely met by the training programs.

B) Regarding training programs overseas, reporting the details only to the director-general is

required. Although meetings by returning trainees from abroad are held, it is difficult for

the participants to find a connection between their daily duties/services and their training

experience. Therefore, trainees’ experiences are not reflected in their actual duties or

services. The training programs have not contributed to the reinforcement of the PMC

organizational capacity.

C) MPC training programs focus on providing useful expertise regarding practical services for

post offices. It functions successfully in terms of maintaining levels of duties/services at

local post offices. On the contrary, not many training programs are provided to raise the

management abilities, in this case staff may be in positions of management as a result of

seniority but not necessarily as a result of skills acquired. The training programs for skill

development are not planned to coordinate with the career paths of staff.

D) The main training method is via lecture. There is no expert, who has mastered the training

method such as case studies, role playing and business games. In addition, a follow up

system has not been adopted to analyze and use training results for future training.

E) The know-how of marketing, quality control and risk management, which are essential to

promote future services and secure competitiveness with private delivery service business,

has not been actively compiled.

2) OJT

OJT, which tends to be considered as a short-term training program for new operations, is

not considered as a skill development method deployed by all post offices based on concrete

guidance development guidelines. There is an office regulation handbook and not an operational

manual.

(3) Measures

To strengthen the institutional ability of MPC against its private competitors, MPC’s training

system should be directed not only for providing necessary business knowledge to its employees, but

also for nurturing them as “human capitals” that are expected to contribute to MPC in the long run.

“Human capitals” in this case mean that they are qualified and trained sufficiently not only to pursue

postal services, but also to manage the MPC through their entire careers according to their professional

backgrounds. The institutional ability of MPC will be heightened by such expertise of its employees.

The following is the concrete measures for building new training system in MPC based on the

issues noted in 6.5.2 (2).

1) Establishment of personnel training group and training plan

As pointed out in 6.5.1(4) 1), the planning and provision of training for the slightly under

1,000 employees will call for collaboration by the person in charge of training in the human

resources & administration group and the members of the operation and services group under

the direction of the first deputy director-general, who is directly responsible for human

resource affairs. The first step of their collaboration is to prepare the general architecture of

training system that includes the goals of each career step of its employees, which is deduced

from the long-term objective of MPC. Then they can move forward to take measures in order

to achieve these goals of its employees. Such “feed forward” method is important to create

training plans that is down to earth. Figure 6-27 is the example JICA Study Team prepared for

the personnel training group.

2) Utilization of the outcome derived from training programs overseas

As pointed out in 6.5.2(2) A) and B), trainees’ experiences in overseas have not been

made most of in the present domestic postal services. Considering the cost incurred for the

training, there is much room to improve the performance. Since the knowledge and

techniques they learned in the courses are the most advanced ones in the field of world postal

service, some measures should be taken to implant them in other employees. The following

are examples to make the best use of their experiences.

・ Trainees are expected to become instructors in the domestic training courses in which

related subjects are taught for employees.

・ The materials trainees have brought home should be translated into Mongolian and

stored in a document room for public use.

Some items trainees learned abroad should be treated as subjects handled in project group

activities mentioned in 6.5.1 (4) 1) B).

3) Expertise coordinated with career development paths of each employee

As pointed out in 6.5.2(2) 1) C), future training programs should be planned to include a

variety of subject combinations in order to attain career step goals that are defined in the

training plans for its employees. In general, employees who serve with MPC for longer

period deserve training courses that aim at promoting their management abilities. To enrich

the training programs especially for those skilled employees as well as administrative staff in

the head office, theories and practices of business administration courses, such as marketing,

organization management, data control, risk management and quality control, should be

taught by outside experts. As a long-term strategy of human resource development, it is

necessary to train up in-house instructors who can teach those courses with the assistance of

outside experts.

4) Diversification in training methods

As pointed out in 6.5.2(2) 1) D), staff in the personnel training group are expected to

develop training skills by introducing various training methods into present lecture-style

courses so as to enhance participants’ ability to cope with practical matters. For this purpose,

staff should be well acquainted with those training methods as well as know-how to develop

training materials with the assistance of outside experts.

It is also important to do a questionnaire survey after the course is over so that

participants’ suggestions are reflected on training course development.

5) Better pay / position in accordance with the achievement in training courses

The performance of general employees in practical training courses for postal services

can be reflected to their salaries to some extent, as a motivation to make their efforts. The

employees who had good records in those staff training courses can be promoted as specialists

who are regarded as leaders in their work places.

6) Better pay for in-house instructors

The staff training is currently offered by administrative staff in the postal operation &

inspection / postal service divisions. Better pay is suggested to evaluate their contribution

toward those training courses, since no extra allowance is paid at this moment.

7) Establishment of the special training course for “Pigeon” services

To support the sales campaign for “Pigeon” services, it is important to offer the special

training course that provides all employees who work in Ulaanbaatar post offices with

comprehensive training (including business manner practice) to handle the service. The annex

building that is currently used by the publication / mail order divisions of MPC will be the

suitable place for training instructors to provide the course.

8) Improvement of OJT activity

As pointed out in 6.5.2(2) 2) A), the way in which OJT activities are performed should be

improved by introducing following steps.

・ Setting each employee’s achievement goal in the work place by mutual agreement

with superiors

・ Preparing a check list to attain each step goal

・ Consulting with superiors to follow PDCA (Plan – Do – Check – Action) cycle

Figure. 6-27 MPC Human Resource Training System Notes

Managers

• Manager training (1) is targeted to managers’ 3-5 years’ service. Manager training (2) is targeted to mangers’ 10-15 years’ service. Leader training is targeted to section chiefs. (External instructors are in charge of these training programs.)

By position/ability

Staff

• The degree of skill obtained from staff training should be reflected directly in staff benefits.

• Staff with outstanding performance should be chosen as specialists. (External instructors are in charge of these training courses.)

In house instructor

Training Programs

By them

e

• Extra allowance is paid to in house instructors for training.

• Regarding a new service, “Pigeon”, a comprehensive training programs required for a set of services, which starts with basic professional behaviors, is conducted.

• Training programs by external instructors are documented to a manual to accumulate the know-how for in-house training.

OJT • Focusing on PDCA for service guidance

Extra-curricular

study

• Partial defrayal or loan system for external training course fees

On–site service guidance

Training courses for language, financial management, computers, etc

New manager training Educational duties, basic professional behavior

Manager training (1) Primary management

Manager training (2) Organizational development management

Leader training Planning of management strategy

General postal services (sales,legalities,techniques,moneyorder, security countermeasures, etc)

New services（”Pigeon” service）

OA skills OA information system

Business administration (marketing, accounting, organizational management, calculation, data control, risk management, quality control)

Economics (Economic theory, finance, statistics)

English communication

New staff training Educational services, basic professional behavior

Staff training Advanced professions by ability (Window service, postal packages, etc）

Specialist training Advanced services and morals

External instructor

6.7. Financial Conditions

6.7.1. Current Conditions

MPC is reporting an increasing level of profit since 1998, which attests to its operational efforts

to date. Profitability is increasing and costs have been contained, and cash at hand is increasing,

which all indicate improving financial health. Considering the general hardship of the quickly

transitioning Mongolian Economy, this is a great achievement.

6.7.2. Issues

It should be noted, however, that several issues remain under this achievement of apparent

financial health, including some problems concerning the financial records itself.

(1) Limited Investment

Current investment is limited to occasional purchases of PC and other small items. They do not

hold any property of their own, and replacement of delivery vehicles rely on the government.

Although MPC claims that they receive no subsidy from the government, these give-aways of vehicles

serve effectively as subsidy. This in turn provides justification for government intervention in all

aspects of MPC operation, and the inability to provide it’s own resource often hinders effective

operation.

(2) Lack of internal auditing

One of the largest problems of MPC’s finances is that there is virtually no proper auditing process

to assure the accuracy of its books. As a result, the MPC’s sales figure does not match the figures that

derives from the actual mail volume. Statistics show that volume for some mail services declined

between 1998 and 1999 but their sales figure shows an increase without any change in the postage.

Therefore, the accuracy of the MPC financial data leaves some room for doubt.

It has also been confirmed that no checks are performed on the data from Aimags. The

accounting department simply assembles the data from each center, without any system of verifying it

against actual inventory or sales figures. This needs to be corrected through the installation of a proper

auditing process.

(3) Others

The increase in cash at hand in 1999 has actually been achieved through a sharp increase in the

payables, which now amounts to more than 50% of the total expenses. This is not a desirable

condition, and should be rectified over the coming years. Also, the current accounting system handles

data from Aimag centers manually. This should easily be moved to a computer system, which should

save huge amount of time and effort which can readily be utilized in other areas.

6.7.3. Future Prospects

Although MPC is showing profits at the moment, it is still thin, and achieved without any major

investments on its own. The maintenance level of various resources is rather low. Another point is

that Ministry of Infrastructure, who has provided delivery vehicles on behalf of MPC up to now,

expressed its intention to stop further provision of vehicles. This means that MPC itself must make

investments out of its own pockets from now on. The current level of business and profits will not be

able to sustain such level of investment.

In order to improve this condition, MPC needs to expand its business and grow into a more

profitable position. This would only be achieved through the various improvements and services that

are proposed in this plan.

The salient points to keep in mind concerning the finances are as follows;

(1) Achieve Financial Independence and Financial Health

Maintain Profitability

MPC has an obligation to provide a certain level of universal service. It needs to maintain many

services that are difficult to achieve profitability. However, this should not be a justification to operate

at an overall loss. It will provide the justification for intervention and the independence of MPC will

be compromised. Overall profitability must be maintained.

Business Growth to Lead Mongolian Economy

The Mongolian Economy is expected to show sustained growth, once its transition to the market

economy has stabilized. Various demands for infrastructure services, such as communication and

transportation, are known to grow faster than the growth of the overall economy. For example

elasticity of the demand for electricity is said to be around 1.2-1.3 worldwide, and this figure is higher

in communications.

MPC today suffers from low growth in mail volume despite the fact that the overall economy is

growing. Since it is highly questionable that the communication and transportation demand is

shrinking under a growing economy, it should be concluded that MPC’s service is not considered

adequate, or its resources cannot meet the demand. Either way, the situation must be changed. MPC

should grow with the Mongolian economy, and ideally lead that growth through a reliable postal

service.

Better Investment

Currently, MPC is trapped in a vicious cycle. Mail volume is declining, and the resources

(delivery vehicles etc.) are deteriorating, which lowers the service and further reduces the mail volume.

In other words, it is basically under contraction. Certain level of investment is necessary in order to

improve the current situation and provide new services. Management must plan for this investment.

Focus on Ulaanbaatar, Aimags should

In Mongolia, the majority of the socio-economic activity is concentrated in Ulaanbaatar. More

than 60% of the MPC sales is in Ulaanbaatar. As for Aimags other than Ulaanbaatar, 17 out of 23 has

showed a loss in 1999, and the profit from Ulaanbaatar operation is virtually cross-subsidizing these

areas

It should be noted that non- Ulaanbaatar Aimags are showing improvements in general,

with the amount of loss decreasing in most of the Aimags between 1998 and 1999. The field trip by

the JICA study team has also revealed that in many Aimags, Postmasters with strong entrepreneurship

has managed to show significant improvements through various sales efforts and cost conscious

introduction of services.

Because of the volume and the business opportunities, MPC should focus on the improvement of their

Ulaanbaatar operations, while encouraging efforts by these Postmasters.

6.7.4. Forecast

Major Assumptions

Sales and Expenses:

1) Sales of Mail Services

(MPC’s books does not distinguish between international mail and domestic mail. Here,

we will treat them as one.)

It is assumed that the volume of mail should increase significantly through stronger sales

effort, public relations and improved services. However, improvement of services may not

prove to be sufficient, since the current level of postage is perceived to be too expensive. At

some point, reduction of postage should be considered in order to boost sales.

The basic assumptions for future growth in mail volume is explained in the previous

sections. We assume here that is as follows. However, there are no sufficient data on the price

elasticity of demand for mail services. Therefore, the growth assumed in 2005 is largely

guesswork.

2000 2% increase in volume, same postage

2001 3% increase in volume, same postage. Prepare for introduction of new services.

2002 3.5% increase in volume, same postage.

2003 10% increase in volume. Introduction of new services and focus on sales.

2004 23% growth in volume. With the current low level of mail usage, this level of growth should

be possible through sheer sales effort.

2005 50% growth, achieved through 50% decrease of postage and the new facility coming into

operation

2006 42% growth in volume.

2007 32% growth in volume.

200 and after 22% growth in volume.

Inflation is fixed at 5% based on the estimates of IMF and MOF of Mongolia. Postage is

not expected to change during this period except in 2005, which should gradually make the

mail services relatively cheaper.

2) Assumptions on the Labor cost

Labor costs increases along with inflation. Because of the low mail volume now,

increase in mail volume should not lead to much increase in the staff. New services should

utilize existing staff as much as possible without resorting to hiring new staff.

As mentioned before, the new services would be concentrated in Ulaanbaatar. At the

Soum level and the Aimag level, staff is abundant. 10 or twenty fold increase in the mail

volume should have very little impact, both in terms of labor and cost.

Even in Ulaanbaatar, new services should not require new personnel. The model

assumes that the average mail per day will grow to become about 3 times as the current level.

This means that the maximum amount of mail, even in the peak period, should be around

5,000 per day. The number of destination address would probably be around 1,500, which is

a number that can easily handled by 20 people. Efficient use of current staff and extensive

use of part timers should provide enough manpower.

For the past several years, MPC’s number of staff has added about 100 new staff each

year, which is a significant increase for an organization of 1,000. This trend, however, reflects

a transition during the separation from the telecom sector. Once this stabilized, there should

be no need for any significant staff increase.

3) Human Resource Development

This will require training and other costs. The training cost will triple.

4) Delivery Cost

Delivery cost will show a significant increase due to the introduction of door-to-door

delivery and the increase in mail volume. Efficient workflow and the use of part timers

should contain the cost at a manageable level.

6.7.5. Forecast and Analysis

A financial forecast was made based on the above assumptions. For comparison, another forecast

was made based on the assumption that the current condition will continue, with only the purchase of

new vehicles and IT facilities as the investment.

If the current condit ion continues, the revenue from mail items is assumed to grow slightly higher

than the GDP (6% annual growth). The investment for vehicles will immediately start to eat into the

cash at hand. This situation will not improve. Expenses rise with inflation, and after 2004, MPC will

slide back into an ever increasing loss. After 2005, MPC will run out of cash. Since no profit can be

expected in the future, no borrowing would be possible. MPC will have to rely on subsidy and capital

injection from the government.

On the other hand, the assumed scenario of new services and growth will change the picture

significantly. Under this outlook, the only years of loss would be 2005 and 2006 where MPC will try

to boost sales through postage cuts. After that, it shall move back to increasing profits.

This will, however, require some level of investment. Under the current model, MPC shall also

aim to improve its financial health, such as lower rate of payables. Therefore, cash outflow will

increase between 2001 and 2007. Especially in 2005, the cash outflow will peak at about 4300 million

Tg.

After that, the cash requirement will diminish. From 2008, cash inflow will continue to increase.

In this model, no outside financing is assumed. All investment will be managed from internal

cash. Therefore, MPC will face a cash shortage after 2004 for several years. Even in 2003, the cash at

hand will be less than the total cash outflow, which is a risky level.

Therefore, a total of 1 billion Tg in cash would be needed, which needs to be acquired through

borrowing, aid or increase in equity. Since MPC is expected to turn a profit in the near future,

borrowing would be an option here.

The total asset of MPC is about2.7 billion Tg. Under the current model, it shall become 4 billion.

If the whole 1 billion Tg is secured through borrowing, this will introduce a significant change in

MPC’s financial structure. Investment schedules and other matters should be approached with caution.

Explanation of Financial Reports

There are following features in financial aspect.

・ In accordance with expansion of business, accounts receivable tend to increase, but in

certain period in middle term, due to shortage of fund, collection of receivables and

decrease of stock (items requiring most fund among running capital) are to be done to the

utmost.

・ Growth of accounts payable as a measure of raising fund is restricted in comparison with

the expansion of sales. Business plan has set a policy not to raise funds from outside

easily by way of increase of payables and outstanding account.

・ In the aspect of income, in the year 2010 compared with the year 1999, 2.2 times increase

of income and 4.7 times increase of profit are expected.

(Unit: 1,000Tg) Table. 6-14 Balance Sheet (With New Services) 1998 1999 2000 2001 2002 2003 2004

AssetsTotal Cash assets 312,188.5 532,013.1 563,943.3 493,091.5 398,273.5 201,520.2 (63,172.1)

Total receivables 383,043.7 337,691.0 306,759.3 314,103.0 324,609.4 347,509.8 384,555.4

Total inventory 727,814.4 710,245.6 710,245.6 710,245.6 710,245.6 710,245.6 710,245.6

Prepaid expenses - 20,612.5 20,612.5 20,612.5 20,612.5 20,612.5 20,612.5 Total working capital 1,423,046.7 1,600,562.3 1,601,560.8 1,538,052.6 1,453,741.1 1,279,888.1 1,052,241.4

Fixed assetsTotal fixed assets 1,327,526.7 1,476,564.7 1,642,024.4 1,867,024.4 2,092,024.4 2,317,024.4 2,542,024.4 Accumulated depreciation (239,520.2) (346,604.6) (454,654.0) (567,703.5) (685,753.0) (808,802.5) (936,851.9) Net balance of fixed assets 1,088,006.4 1,129,960.2 1,187,370.3 1,299,320.9 1,406,271.4 1,508,221.9 1,605,172.4

InvestmentTotal investment 19,955.3 15,459.6 - - - 100,000.0 300,000.0

Total assets 2,531,008.5 2,745,982.1 2,788,931.1 2,837,373.4 2,860,012.4 2,888,110.0 2,957,413.9

1998 1999 2000 2001 2002 2003 2004Equity and liability At end

TotalShort-term liabilityTotal short-term payables 801,798.7 1,009,519.5 976,753.2 979,050.2 981,542.3 983,978.7 983,349.7

Long-term payablesLong-term liability -

Share holders' capitalPaid in capital 883,477.8 892,727.5 892,727.5 892,727.5 892,727.5 892,727.5 892,727.5 Accumulated profit 181,553.4 119,992.1 203,970.3 279,686.3 325,831.6 345,978.5 371,639.7 Profits during the period under review 24,423.5 83,978.3 75,716.0 46,145.3 20,147.0 25,661.2 69,932.8 Changes after revaluation 66,142.0 66,142.0 66,151.3 66,151.3 66,151.3 66,151.3 66,151.3 Stamp adjustment 573,613.0 573,612.9 573,612.9 573,612.9 573,612.9 573,612.9 573,612.9

Share-holders' total capital 1,729,209.8 1,736,452.7 1,812,177.9 1,858,323.2 1,878,470.2 1,904,131.3 1,974,064.2

Total assets and liability 2,531,008.5 2,745,972.1 2,788,931.1 2,837,373.4 2,860,012.4 2,888,110.0 2,957,413.9

2005 2006 2007 2008 2009 2010

(468,426.6) (701,333.0) (840,811.7) (808,072.1) (578,646.6) (232,919.8)

356,081.1 412,870.9 476,073.5 535,453.3 601,133.2 678,535.5

710,245.6 710,245.6 710,245.6 710,245.6 710,245.6 710,245.6

20,612.5 20,612.5 20,612.5 20,612.5 20,612.5 20,612.5 618,512.6 442,396.0 366,119.9 458,239.3 753,344.8 1,176,473.9

3,227,024.4 3,552,024.4 3,877,024.4 4,202,024.4 4,427,024.4 4,652,024.4 (1,069,901.4) (1,207,950.9) (1,351,000.3) (1,499,049.8) (1,652,099.3) (1,810,148.7) 2,157,123.0 2,344,073.5 2,526,024.0 2,702,974.6 2,774,925.1 2,841,875.6

- - - - -

2,775,635.6 2,786,469.5 2,892,144.0 3,161,213.9 3,528,269.9 4,018,349.5

(Unit: 1,000Tg)

2005 2006 2007 2008 2009 2010

959,502.0 956,238.7 948,209.3 1,022,330.4 1,104,296.7 1,196,325.2

892,727.5 892,727.5 892,727.5 892,727.5 892,727.5 892,727.5 441,572.5 283,641.9 297,739.2 411,443.0 606,391.8 891,481.5

(157,930.6) 14,097.3 113,703.8 194,948.8 285,089.7 398,051.1 66,151.3 66,151.3 66,151.3 66,151.3 66,151.3 66,151.3

573,612.9 573,612.9 573,612.9 573,612.9 573,612.9 573,612.9

1,816,133.6 1,830,230.8 1,943,934.6 2,138,883.4 2,423,973.1 2,822,024.3

2,775,635.6 2,786,469.5 2,892,143.9 3,161,213.9 3,528,269.9 4,018,349.5

1998 1999 2000 2001 2002 2003 2004Sales:Telecommunication services 21,320.5 14,845.7 14,845.7 14,845.7 14,845.7 14,845.7 14,845.7 Mail Items 533,482.7 676,697.8 690,231.8 712,319.2 737,250.4 840,465.4 1,033,772.5 Stamps 324,005.0 302,167.0 302,167.0 317,275.35 349,002.89 383,903.17 422,293.49 Passenger Tranportation 146,387.0 163,789.5 163,789.5 163,789.5 163,789.5 163,789.5 163,789.5 Periodicals 265,485.8 101,986.0 109,669.1 117,931.1 126,815.4 136,369.1 146,642.4 Banking Services 3,252.9 47,500.0 64,500.0 68,000.0 72,500.0 77,500.0 82,500.0 International Mail Settlement and others 265,388.4 670,127.2 670,127.23 670,127.23 670,127.23 670,127.23 670,127.23

Non-operating revenue 29,018.7 29,731.8 29,731.8 29,731.8 29,731.8 29,731.8 29,731.8 Amounts to be deducted from VAT (27,341.5) Total sale 1,539,678.9 1,991,999.3 2,045,062.1 2,094,019.8 2,164,062.9 2,316,731.9 2,563,702.6

Operating expensesLabor Costs (Wages and Bensefits) 519,997.9 694,561.4 725,816.65 758,478.39 792,609.92 828,277.37 865,549.85 Direct Sales Expenses 217,528.0 217,685.9 217,685.9 228,570.2 251,427.2 276,570.0 304,227.0 Expenses for security guards and fire-prevention services 384.7 6,328.7 8,593.74 9,060.06 9,659.63 10,325.81 10,991.99 Rental expenses 42,041.2 103,421.5 108,592.57 114,022.20 119,723.31 125,709.48 131,994.95 Gross Transportation cost 276,095.3 329,746.6 346,233.93 363,545.63 381,722.91 400,809.05 420,849.50 Expenses for postal service delivery 43,299.7 44,269.9 46,483.40 69,725.10 97,615.14 126,899.69 152,279.63 Services sub-contracted by other entities 5,235.5 4,580.6 4,901.22 5,244.31 5,611.41 6,004.21 6,424.51 Publicity and advertising expenses 3,141.8 5,114.3 5,370.03 11,277.06 11,840.91 12,432.96 13,054.61 Foreign consultant and training expenses 10,541.5 6,282.0 6,596.12 13,851.85 14,544.44 15,271.67 16,035.25 Insurance premuim 4,528.2 3,617.8 3,617.8 Transport and tax expenses 85,461.2 57,478.1 57,478.1 57,478.1 57,478.1 57,478.1 57,478.1

Other Expenses 23,487.4 23,056.3 24,670.28 26,397.19 28,245.00 30,222.15 32,337.70 Depreciation of fixed assets 104,498.0 108,049.5 108,049.5 113,049.5 118,049.5 123,049.5 128,049.5

Total operating expenses 1,489,962.1 1,818,362.7 1,883,964.33 1,995,838.41 2,121,196.99 2,262,133.64 2,414,909.32

Operating income 49,716.8 173,636.6 161,097.8 98,181.4 42,865.9 54,598.2 148,793.3 Fluctuation of exchange rate /losses& profits/ 3,907.8 2,687.4 Total non-operating revenue 3,907.8 2,687.4 Before tax revenue 53,624.6 176,324.0 161,097.8 98,181.4 42,865.9 54,598.2 148,793.3 Income tax expenses 29,201.1 92,345.7 85,381.83 52,036.15 22,718.92 28,937.06 78,860.43

Net income 24,423.5 83,978.3 75,716.0 46,145.3 20,147.0 25,661.2 69,932.8 Source: JICA Study Team

(Unit: 1,000Tg)

2005 2006 2007 2008 2009 2010

14,845.7 14,845.7 14,845.7 14,845.7 14,845.7 14,845.7 785,667.1 1,099,933.9 1,451,912.8 1,771,333.6 2,125,600.3 2,550,720.3

464,522.84 510,975.12 562,072.64 618,279.90 680,107.89 748,118.68 163,789.5 163,789.5 163,789.5 163,789.5 163,789.5 163,789.5 157,689.7 169,569.3 182,343.8 196,080.7 210,852.5 226,737.1 87,500.0 93,500.0 99,000.0 105,500.0 112,500.0 119,500.0

670,127.23 670,127.23 670,127.23 670,127.23 670,127.23 670,127.23

29,731.8 29,731.8 29,731.8 29,731.8 29,731.8 29,731.8

2,373,873.9 2,752,472.6 3,173,823.4 3,569,688.4 4,007,554.9 4,523,570.3

904,499.59 945,202.08 987,736.17 1,032,184.30 1,078,632.59 1,127,171.06 334,649.6 368,114.6 404,926.1 445,418.7 489,960.5 538,956.6

11,658.17 12,457.59 13,190.38 14,056.42 14,989.07 15,921.73 138,594.70 145,524.43 152,800.66 160,440.69 168,462.72 176,885.86 441,891.98 463,986.58 487,185.91 511,545.20 537,122.46 563,978.59 182,735.55 219,282.66 263,139.19 315,767.03 378,920.44 454,704.53

6,874.22 7,355.42 7,870.30 8,421.22 9,010.70 9,641.45 13,707.34 14,392.70 15,112.34 15,867.96 16,661.35 17,494.42 16,837.01 17,678.86 18,562.81 19,490.95 20,465.49 21,488.77

57,478.1 57,478.1 57,478.1 57,478.1 57,478.1 57,478.1

34,601.34 37,023.43 39,615.07 42,388.13 45,355.29 48,530.17 133,049.5 138,049.5 143,049.5 148,049.5 153,049.5 158,049.5

2,531,804.48 2,722,478.38 2,931,900.50 3,154,903.64 3,400,981.01 3,676,652.96

(157,930.6) 29,994.2 241,922.9 414,784.8 606,573.8 846,917.3

(Unit: 1,000Tg)(157,930.6) 29,994.2 241,922.9 414,784.8 606,573.8 846,917.3

- 15,896.92 128,219.16 219,835.92 321,484.14 448,866.19

(157,930.6) 14,097.3 113,703.8 194,948.8 285,089.7 398,051.1

Table. 6-15 Income Statement (With New Services)

(Unit: 1,000Tg)

Table. 6-17 Investment Plan (With New Services) (Unit: 1,000Tg)

Table. 6-16 Statement on Cash Transaction (With New Services) Basic operating cash transactions 1998 1999 2000 2001 2002 2003 2004Net revenue 26,828.0 83,978.3 75,716.0 46,145.3 20,147.0 25,661.2 69,932.8 Changes in accumulated profit (increase) 313.7

Net profit 27,141.7 83,978.3 75,716.0 46,145.3 20,147.0 25,661.2 69,932.8

Non-cash income /losses & profits/Growth:Decrease in advance and receivable 181,157.6 24,740.2 30,931.7 (7,343.7) (10,506.5) (22,900.3) (37,045.6)

17,568.7 Depreciation expenses 10,168.7 107,071.7 108,049.5 113,049.5 118,049.5 123,049.5 128,049.5 Increase in accounts payable 42,029.4 207,730.8 (32,766.3) 2,297.1 2,492.0 2,436.4 (629.0) Total 233,355.6 357,111.4 106,214.9 108,002.9 110,035.0 102,585.6 90,374.9

Decline:Increase in goods and materials 38,270.4 - - - - - Total (38,270.4)

Basic operating cash transactions 222,226.9 441,089.6 181,930.9 154,148.2 130,182.0 128,246.7 160,307.7

Investment cash transactionsNet investment cash transactions 581.6 (144,529.7) (150,000.0) (225,000.0) (225,000.0) (325,000.0) (425,000.0)

Financing cash transactionsIncrease in paid in capital 49,399.2 9,249.6 Reduction in paid in capital 130,764.1 Net financing cash transactions (81,364.8) (76,735.4)

Total changes in Cash 141,443.7 219,824.6 31,930.9 (70,851.8) (94,818.0) (196,753.3) (264,692.3)

Initial balance of Cash 170,744.2 312,187.9 532,012.5 563,943.3 493,091.5 398,273.5 201,520.2 Final balance of Cash 312,187.9 532,012.5 563,943.3 493,091.5 398,273.5 201,520.2 (63,172.1) Source: JICA Study Team

2005 2006 2007 2008 2009 2010(157,930.6) 14,097.3 113,703.8 194,948.8 285,089.7 398,051.1

(157,930.6) 14,097.3 113,703.8 194,948.8 285,089.7 398,051.1

28,474.3 (56,789.8) (63,202.6) (59,379.7) (65,680.0) (77,402.3)

133,049.5 138,049.5 143,049.5 148,049.5 153,049.5 158,049.5 (23,847.7) (3,263.3) (8,029.3) 74,121.1 81,966.3 92,028.5 137,676.0 77,996.4 71,817.5 162,790.8 169,335.8 172,675.6

- - - - - -

(20,254.6) 92,093.6 185,521.3 357,739.6 454,425.5 570,726.8

(385,000.0) (325,000.0) (325,000.0) (325,000.0) (225,000.0) (225,000.0)

(405,254.6) (232,906.4) (139,478.7) 32,739.6 229,425.5 345,726.8

(63,172.1) (468,426.6) (701,333.0) (840,811.7) (808,072.1) (578,646.6) (468,426.6) (701,333.0) (840,811.7) (808,072.1) (578,646.6) (232,919.8)

Investment Plan2001 2002 2003 2004

Delivery Vehicle 75,000.0 75,000.0 75,000.0 75,000.0 Facility Improvements and others 150,000.0 150,000.0 150,000.0 150,000.0

IT (bank) related Investment

New Workspace 100,000.0 200,000.0

Total Investment 225,000.0 225,000.0 325,000.0 425,000.0

2005 2006 2007 2008 2009 201075,000.0 75,000.0 75,000.0 75,000.0 75,000.0 75,000.0

150,000.0 150,000.0 150,000.0 150,000.0 150,000.0 150,000.0

100,000.0 100,000.0 100,000.0 100,000.0

60,000.0

385,000.0 325,000.0 325,000.0 325,000.0 225,000.0 225,000.0

(Unit: 1,000Tg) Table. 6-18 Balance Sheet (Low Case)

1998 1999 2000 2001 2002 2003 2004AssetsTotal Cash assets 312,188.5 532,013.1 564,221.2 498,111.4 413,893.7 309,241.4 174,235.3

Total receivables 383,043.7 337,691.0 306,759.3 317,001.9 330,353.5 344,751.5 360,199.8

Total inventory 727,814.4 710,245.6 710,245.6 710,245.6 710,245.6 710,245.6 710,245.6

Prepaid expenses - 20,612.5 20,612.5 20,612.5 20,612.5 20,612.5 20,612.5 Total working capital 1,423,046.7 1,600,562.3 1,601,838.6 1,545,971.5 1,475,105.4 1,384,851.1 1,265,293.2

Fixed assetsTotal fixed assets 1,327,526.7 1,476,564.7 1,642,024.4 1,867,024.4 2,092,024.4 2,317,024.4 2,542,024.4 Accumulated depreciation (239,520.2) (346,604.6) (454,654.0) (567,703.5) (685,753.0) (808,802.5) (936,851.9) Net balance of fixed assets 1,088,006.4 1,129,960.2 1,187,370.3 1,299,320.9 1,406,271.4 1,508,221.9 1,605,172.4

InvestmentTotal investment 19,955.3 15,459.6 - - - - -

Total assets 2,531,008.5 2,745,982.1 2,789,208.9 2,845,292.3 2,881,376.8 2,893,073.0 2,870,465.7

1998 1999 2000 2001 2002 2003 2004Equity and liability At end

TotalShort-term liabilityTotal short-term payables 801,798.7 1,009,519.5 978,663.2 983,914.0 989,161.2 990,413.8 984,832.7

Long-term payablesLong-term liability -

Share holders' capitalPaid in capital 883,477.8 892,727.5 892,727.5 892,727.5 892,727.5 892,727.5 892,727.5 Accumulated profit 181,553.4 119,992.1 203,970.3 278,054.1 328,886.7 359,723.9 370,167.5 Profits during the period under review 24,423.5 83,978.3 74,083.7 50,832.6 30,837.2 10,443.7 (17,026.2) Changes after revaluation 66,142.0 66,142.0 66,151.3 66,151.3 66,151.3 66,151.3 66,151.3 Stamp adjustment 573,613.0 573,612.9 573,612.9 573,612.9 573,612.9 573,612.9 573,612.9

Share-holders' total capital 1,729,209.8 1,736,452.7 1,810,545.7 1,861,378.3 1,892,215.5 1,902,659.2 1,885,633.0

Total assets and liability 2,531,008.5 2,745,972.1 2,789,208.9 2,845,292.3 2,881,376.7 2,893,073.0 2,870,465.7

2005 2006 2007 2008 2009 2010

(104,212.8) (431,718.2) (816,122.1) (1,176,393.7) (1,499,303.1) (1,895,733.2)

376,783.9 394,746.8 413,964.6 434,771.9 457,213.0 481,342.5

710,245.6 710,245.6 710,245.6 710,245.6 710,245.6 710,245.6

20,612.5 20,612.5 20,612.5 20,612.5 20,612.5 20,612.5 1,003,429.2 693,886.7 328,700.7 (10,763.7) (311,232.0) (683,532.6)

2,867,024.4 3,192,024.4 3,517,024.4 3,842,024.4 4,067,024.4 4,292,024.4 (1,069,901.4) (1,207,950.9) (1,351,000.3) (1,499,049.8) (1,652,099.3) (1,810,148.7) 1,797,123.0 1,984,073.5 2,166,024.0 2,342,974.6 2,414,925.1 2,481,875.6

- - - - -

2,800,552.2 2,677,960.2 2,494,724.7 2,332,210.9 2,103,693.1 1,798,343.0

(Unit: 1,000Tg)

2005 2006 2007 2008 2009 2010

975,949.3 963,314.9 946,145.4 1,013,199.1 1,087,153.0 1,168,929.0

892,727.5 892,727.5 892,727.5 892,727.5 892,727.5 892,727.5 353,141.3 292,111.3 182,153.7 16,087.6 (213,479.9) (515,951.6) (61,030.0) (109,957.6) (166,066.1) (229,567.5) (302,471.7) (387,126.1) 66,151.3 66,151.3 66,151.3 66,151.3 66,151.3 66,151.3

573,612.9 573,612.9 573,612.9 573,612.9 573,612.9 573,612.9

1,824,602.9 1,714,645.4 1,548,579.3 1,319,011.8 1,016,540.0 629,414.0

2,800,552.2 2,677,960.2 2,494,724.7 2,332,210.9 2,103,693.1 1,798,343.0

(Unit: 1,000Tg) Table. 6-19 Income Statement (Low Case)

1998 1999 2000 2001 2002 2003 2004Sales:Telecommunication services 21,320.5 14,845.7 14,845.7 14,845.7 14,845.7 14,845.7 14,845.7 Mail Items 533,482.7 676,697.8 690,231.8 731,645.7 775,544.4 822,077.1 871,401.7 Stamps 324,005.0 302,167.0 302,167.0 317,275.35 349,002.89 383,903.17 422,293.49 Passenger Tranportation 146,387.0 163,789.5 163,789.5 163,789.5 163,789.5 163,789.5 163,789.5 Periodicals 265,485.8 101,986.0 109,669.1 117,931.1 126,815.4 136,369.1 146,642.4 Banking Services 3,252.9 47,500.0 64,500.0 68,000.0 72,500.0 77,500.0 82,500.0 International Mail Settlement and others 265,388.4 670,127.2 670,127.23 670,127.23 670,127.23 670,127.23 670,127.23

Non-operating revenue 29,018.7 29,731.8 29,731.8 29,731.8 29,731.8 29,731.8 29,731.8 Amounts to be deducted from VAT (27,341.5) Total sale 1,539,678.9 1,991,999.3 2,045,062.1 2,113,346.3 2,202,356.9 2,298,343.5 2,401,331.8

Operating expensesLabor Costs (Wages and Bensefits) 519,997.9 694,561.4 729,289.45 765,753.92 804,041.62 844,243.70 886,455.89 Direct Sales Expenses 217,528.0 217,685.9 217,685.9 228,570.2 251,427.2 276,570.0 304,227.0 Expenses for security guards and fire-prevention services 384.7 6,328.7 8,593.74 9,060.06 9,659.63 10,325.81 10,991.99 Rental expenses 42,041.2 103,421.5 108,592.57 114,022.20 119,723.31 125,709.48 131,994.95 Gross Transportation cost 276,095.3 329,746.6 346,233.93 363,545.63 381,722.91 400,809.05 420,849.50 Expenses for postal service delivery 43,299.7 44,269.9 46,483.40 69,725.10 97,615.14 126,899.69 152,279.63 Services sub-contracted by other entities 5,235.5 4,580.6 4,901.22 5,244.31 5,611.41 6,004.21 6,424.51 Publicity and advertising expenses 3,141.8 5,114.3 5,370.03 11,277.06 11,840.91 12,432.96 13,054.61 Foreign consultant and training expenses 10,541.5 6,282.0 6,596.12 13,851.85 14,544.44 15,271.67 16,035.25 Insurance premuim 4,528.2 3,617.8 3,617.8 Transport and tax expenses 85,461.2 57,478.1 57,478.1 57,478.1 57,478.1 57,478.1 57,478.1

Other Expenses 23,487.4 23,056.3 24,670.28 26,397.19 28,245.00 30,222.15 32,337.70 Depreciation of fixed assets 104,498.0 108,049.5 108,049.5 113,049.5 118,049.5 123,049.5 128,049.5

Total operating expenses 1,489,962.1 1,818,362.7 1,887,437.13 2,005,191.83 2,136,745.88 2,276,122.95 2,418,358.05

Operating income 49,716.8 173,636.6 157,625.0 108,154.5 65,611.0 22,220.6 (17,026.2) Fluctuation of exchange rate /losses& profits/ 3,907.8 2,687.4 Total non-operating revenue 3,907.8 2,687.4 Before tax revenue 53,624.6 176,324.0 157,625.0 108,154.5 65,611.0 22,220.6 (17,026.2) Income tax expenses 29,201.1 92,345.7 83,541.24 57,321.87 34,773.86 11,776.91 -

Net income 24,423.5 83,978.3 74,083.7 50,832.6 30,837.2 10,443.7 (17,026.2) Source: JICA Study Team

2005 2006 2007 2008 2009 2010

14,845.7 14,845.7 14,845.7 14,845.7 14,845.7 14,845.7 923,685.8 979,107.0 1,037,853.4 1,100,124.6 1,166,132.1 1,236,100.0

464,522.84 510,975.12 562,072.64 618,279.90 680,107.89 748,118.68 163,789.5 163,789.5 163,789.5 163,789.5 163,789.5 163,789.5 157,689.7 169,569.3 182,343.8 196,080.7 210,852.5 226,737.1

87,500.0 93,500.0 99,000.0 105,500.0 112,500.0 119,500.0 670,127.23 670,127.23 670,127.23 670,127.23 670,127.23 670,127.23

29,731.8 29,731.8 29,731.8 29,731.8 29,731.8 29,731.8

2,511,892.6 2,631,645.6 2,759,764.1 2,898,479.4 3,048,086.7 3,208,950.0

930,778.68 977,317.62 1,026,183.50 1,077,492.67 1,131,367.30 1,187,935.67 334,649.6 368,114.6 404,926.1 445,418.7 489,960.5 538,956.6

11,658.17 12,457.59 13,190.38 14,056.42 14,989.07 15,921.73 138,594.70 145,524.43 152,800.66 160,440.69 168,462.72 176,885.86 441,891.98 463,986.58 487,185.91 511,545.20 537,122.46 563,978.59 182,735.55 219,282.66 263,139.19 315,767.03 378,920.44 454,704.53

6,874.22 7,355.42 7,870.30 8,421.22 9,010.70 9,641.45 13,707.34 14,392.70 15,112.34 15,867.96 16,661.35 17,494.42 16,837.01 17,678.86 18,562.81 19,490.95 20,465.49 21,488.77

57,478.1 57,478.1 57,478.1 57,478.1 57,478.1 57,478.1

34,601.34 37,023.43 39,615.07 42,388.13 45,355.29 48,530.17 133,049.5 138,049.5 143,049.5 148,049.5 153,049.5 158,049.5

2,572,922.67 2,741,603.19 2,925,830.19 3,128,046.90 3,350,558.39 3,596,076.01

(61,030.0) (109,957.6) (166,066.1) (229,567.5) (302,471.7) (387,126.1)

(Unit: 1,000Tg)(61,030.0) (109,957.6) (166,066.1) (229,567.5) (302,471.7) (387,126.1)

- - - - - -

(61,030.0) (109,957.6) (166,066.1) (229,567.5) (302,471.7) (387,126.1)

(Unit: 1,000Tg)

(Unit: 1,000Tg) Table. 6-20 Statement on Cash Transaction (Low Case)

Table. 6-21 Investment Plan (Low Case)

Basic operating cash transactions 1998 1999 2000 2001 2002 2003 2004Net revenue 26,828.0 83,978.3 74,083.7 50,832.6 30,837.2 10,443.7 (17,026.2) Changes in accumulated profit (increase) 313.7

Net profit 27,141.7 83,978.3 74,083.7 50,832.6 30,837.2 10,443.7 (17,026.2)

Non-cash income /losses & profits/Growth:Decrease in advance and receivable 181,157.6 24,740.2 30,931.7 (10,242.6) (13,351.6) (14,398.0) (15,448.2)

17,568.7 Depreciation expenses 10,168.7 107,071.7 108,049.5 113,049.5 118,049.5 123,049.5 128,049.5 Increase in accounts payable 42,029.4 207,730.8 (30,856.2) 5,250.8 5,247.2 1,252.6 (5,581.1) Total 233,355.6 357,111.4 108,125.0 108,057.7 109,945.1 109,904.0 107,020.1

Decline:Increase in goods and materials 38,270.4 - - - - - Total (38,270.4)

Basic operating cash transactions 222,226.9 441,089.6 182,208.7 158,890.3 140,782.3 120,347.7 89,993.9

Investment cash transactionsNet investment cash transactions 581.6 (144,529.7) (150,000.0) (225,000.0) (225,000.0) (225,000.0) (225,000.0)

Financing cash transactionsIncrease in paid in capital 49,399.2 9,249.6 Reduction in paid in capital 130,764.1 Net financing cash transactions (81,364.8) (76,735.4)

Total changes in Cash 141,443.7 219,824.6 32,208.7 (66,109.7) (84,217.7) (104,652.3) (135,006.1)

Initial balance of Cash 170,744.2 312,187.9 532,012.5 564,221.2 498,111.4 413,893.7 309,241.4 Final balance of Cash 312,187.9 532,012.5 564,221.2 498,111.4 413,893.7 309,241.4 174,235.3 Source: JICA Study Team

2005 2006 2007 2008 2009 2010(61,030.0) (109,957.6) (166,066.1) (229,567.5) (302,471.7) (387,126.1)

(61,030.0) (109,957.6) (166,066.1) (229,567.5) (302,471.7) (387,126.1)

(16,584.1) (17,963.0) (19,217.8) (20,807.3) (22,441.1) (24,129.5)

133,049.5 138,049.5 143,049.5 148,049.5 153,049.5 158,049.5 (8,883.4) (12,634.4) (17,169.4) 67,053.7 73,953.9 81,776.0

107,581.9 107,452.1 106,662.3 194,295.8 204,562.3 215,696.0

- - - - - -

46,551.9 (2,505.5) (59,403.8) (35,271.6) (97,909.4) (171,430.1)

(325,000.0) (325,000.0) (325,000.0) (325,000.0) (225,000.0) (225,000.0)

(278,448.1) (327,505.5) (384,403.8) (360,271.6) (322,909.4) (396,430.1)

174,235.3 (104,212.8) (431,718.2) (816,122.1) (1,176,393.7) (1,499,303.1) (104,212.8) (431,718.2) (816,122.1) (1,176,393.7) (1,499,303.1) (1,895,733.2)

2001 2002 2003 2004 2005Delivery Vehicle 75,000.0 75,000.0 75,000.0 75,000.0 75,000.0 Facility Improvements and others 150,000.0 150,000.0 150,000.0 150,000.0 150,000.0

IT (bank) related Investment 100,000.0

New Workspace - - -

Total Investment 225,000.0 225,000.0 225,000.0 225,000.0 325,000.0

2006 2007 2008 2009 201075,000.0 75,000.0 75,000.0 75,000.0 75,000.0

150,000.0 150,000.0 150,000.0 150,000.0 150,000.0

100,000.0 100,000.0 100,000.0

325,000.0 325,000.0 325,000.0 225,000.0 225,000.0

6.8. Estimated Operation Expense

As the estimated operation expense, the following 6 investments for MPC are required.

(1) Improvement of Mail Handling

This program aims at improving the mail handling operations within MPC. The

investments in this program will reduce the loss and damages of mails, contributing to

improving the reputation of MPC. The investment is not so high in amount, but it will produce great

effects that will result from the recovery of reliability.

Fixtures, small conveyor equipment.

By employing push cart, roller conveyor, etc. in central post office and Aimags post office, this

investment is for the improvement of trust aspect.

The amount of investment is as follows. Total 30 sets are estimated for central post office, Ulaanbaatar

city and 20 Aimags

1) Roll box pallet (equipped with casters for transfer of parcel of 1 cubic meter)

$1,000 x 30sets=$30,000

2) Push cart

$500 x 30sets=$15,000

3) Roller conveyor (equipment for hoisting parcels from cart or steps)

$800 x 30sets=$24,000

4) Post bag (durable post bags $10)

$10 x 500 bags=$5,000

Total $74,000 (above sum (1)-(4)).

(2) Investment for improvement of post delivery

For the post vehicles for collection and delivery, the following investments were planned,

in which the vehicles are assumed to be jeeps of Russian make considering the road condition,

topography and weather of Mongolia. It is thought that Russian vehicles are most suitable for

post vehicles in terms of prices and ease of repairing. Actual post vehicles in running are 102sets. The life of vehicles is 7 years, although it varies

depending on road condition. Therefore 15 sets will have to be replaced yearly. The annual investment

amounts to 15sets x $5,000=$75,000(75 million Tg).

(3) Investment plans for management support system

Introduction of accounting software costs ca.$30,000 for the size of 1000 employees and

20 branches (cost varies with the sizes). So MPC will invest for this size. For the security of

remittance service and increase of deal in Soum, it is planned to purchase ca.200 sets of PC in

the year 2005. By introduction of the PCs, remittance service can be well organized and

increase productivity and security. The implementation of this investment will strengthen the

foundation of remittance and payment services. In particular, MPC will be in a position to

undertake the role of remittance and payment in local areas associated with the withdrawal of

banks from local areas. The improvement of the whole financial position of MPC including

those of branches will be accelerated, and the decision of the management will be improved,

which would exert the great effects on the cost consciousness of the employees. IT investment

is estimated as total 400 million Tg ($400,000).

It is to be noted, however, that this master plan does not cover the discussion of

construction of the Internet, an intranet and other information network.

(4) Training project

There are three types of training programs necessary.

Training for the staff of administration divis ion of Ulaanbaatar city and Aimag center:

1) Ulaanbaatar and Aimag centers

Trainee: MPC executives and city post office chiefs (50 persons), Aimag center

chief , accounting staffs(50 persons). Total of 100 persons.

Place: Ulaabaatar city

Frequency: Semiannual (3 days each)

Cycle: 3 years as 1 cycle

Expenses: A total of 2.52 million Tg ($2,520) per year (estimation of expenses for

meeting places, hotel charges, traveling expenses and expenses for

foods/beverages at parties)

2) Training at the work site in local areas

Trainee: City post chiefs and Aimag center chief staff (20 persons)

Place: Each Aimag center

Frequency: Semiannual (3 days each)

Cycle: 3 years as 1 cycle

Expenses: A total of 4.77 million Tg ($4,770) per year (estimation of expenses for

meeting places, hotel charges, traveling expenses and expenses for

foods/beverages at parties)

The higher training cost in local areas is due to the training of ca.500 local employees.

Training total cost amounts to $7,300 in 3 years.

3) Domestic and international seminars

The budget for information gathering for domestic and international seminars and their

promotions (i.e. translation of the publications) within MPC would be one million Tg per

year ($1,000 per year).

(5) Delivery facility

The current post office is already proving to be inadequate for handling mail. To meet with

increasing mails, new mail handling facility will be required. Estimated facility size is as follows.

Facility: ca. 360,000,000Tg ($360,000)

Site area: 800 ㎡

Building area: 600 ㎡

Floor area: 1,200 ㎡, 1F 600 ㎡, 2F 600 ㎡

Floor : 2 F (ceiling height of 1F is 3.5 m)

Volume: 4,200 cubic meters

Other facility: elevator 1 set

truck berth 2 places

(6) New services

To improve the “pigeon express” service, it is advisable to add 3-4 vehicles to the present 1 vehicle for

EMS. Post vehicle for EMS runs in Ulaanbaatar city, therefore Japanese light car can be used and

investment amount is ca.30 million Tg ($30,000.)

Above 6 investment amounts to total 980 million Tg ($0.98 million). In short terms, main investments

remain as training, fixtures, small conveyor equipment and the burden is small. But from the year

2005, when “Pigeon Mail” service starts, investment as vehicles and PC will be added and expand.

6.9 Evaluation

Here, six programs proposed in the “Estimated Operation Expenses” were evaluated from

technical, economic and social points of view.

6.9.1.Technical Evaluation

Among the six programs, into which the survey results were put together, there are three

programs presented as the short-term measures, i.e. Mail Handling Improvement Program, Collection

and Delivery Improvement Program, and Education and Training Program. As mentioned before,

Mongolia has many problems for handling mails at the present time. It is an urgent issue to improve

such problems, and this report presents the proposal to meet such requirement. There is currently not

so much volume of mail in Mongolia, but the contents suggested in those proposals can be said to

match the actual status of Mongolia in the light of improvement of quality and creation of sense of

service. The proposals for improvement practicable and easy to implement and for fostering the

personnel to support it can be evaluated as reasonable.

For the long term programs, the Management Supporting System Implementation Program, the

New Mail Handling Facilities Set-up Program and the Pigeon Mail Vehicles Investment Program draw

a clear line from the existing services and intended to aim at the development of advanced country

type modern mail services, in which were incorporated the measures for door-to-door delivery and

cost reduction. Since the programs were prepared from the standpoint of improving the existing

services and implementing it with the preparatory period provided in order to realize it in Mongolia,

although there are some necessary investment, it has high probability of realization from technical

point of view. Furthermore, recommendation is made to the improvement of MPC’s structure such as

the reorganization of management and the improvement of speed of management decisions, which can

be evaluated to be reasonable. The addition of the fostering of personnel to the new services including

Pigeon Mail and the reorganization of management would mean the provision high-quality services.

And the procedures for introduction of the measures of starting it from the area where demand for

mail is most promising like the Ulaanbaatar city can also be evaluated to be reasonable in order to

effectively utilize limited resources. As for Pigeon Mail, the volume is forecast to increase rapidly and

exceed the level of 3 million in 2010, which is never an unrealistic forecast. According to interviews

conducted by the study team, MobiCom, a cellular phone company, said that they had a membership

of 35,000 and its contemporary, SKYTEL has 20,000 membership. If 60% of them are the type which

the monthly invoices are sent to customers, the mail will reach about 400,000 in a year. If there will

be around 10 companies of such type (for example, financial institutions, distribution enterprises,

utilities companies and so on) in the country, the forecast can be reasonable.

6.9.2.Economic Evaluation

Initially, it was decided to assess economic effect based on analysis of benefit versus cost

(B/C). For the reasons noted below, however, it was decided to make the assessment mainly from

the financial perspective.

As already described, postal services in Mongolia are saddled with many difficulties, and the

establishment of services that will restore the confidence and trust of customers is an urgent priority.

The JICA Study Team proposed six programs for resolution of problems such as mail loss, delay, and

non-delivery. The total investment required for these programs is estimated at 980 million tugrik, as

described in the section on project cost. Nevertheless, the profit deriving from these services would

be difficult to estimate, owing to the numerous factors of uncertainty surrounding the MPC's position,

i.e., exposure to competition in UB, where private firms have a big share of the market, and obligation

to maintain services in rural districts. In addition, it is thought that, at the present stage, emphasis

should be placed more on the MPC's ability to maintain financial self-sufficiency and ensure a

sustained profitability and prospects for investment with its own funds in establishing the quality

services resulting from these programs than on assessment of the direct benefit to users. For this

reason, the Study Team decided to conduct a financial assessment, i.e., one based on an estimate of

the prospective return on the investment required for the programs, rather than an economic

assessment.

On this basis, the total facility investment of 980 million Tg may be expected to have a great

effect for improving earnings and services. For example, the sales of 2,040 million Tg in 2000

(estimated) are expected to increase by 2.2 times to 4,520 million Tg in 2010, while the profits is

expected to increase from 76 million Tg to 400 million, a remarkable improvement. This is based on

the positive implementation of investment that is expected to be greatly effective for the operation of

MPC as mentioned in the section of “Estimated Operation Expenses”.

First, IT investment and the investment for accounting software will contribute to the

improvement of management and the cost reduction of remittance-related service particularly. The

improvement of the whole financial position of MPC including those of branches will be accelerated,

and the decision of the management will be improved, which would exert the great effects on the cost

consciousness of the employees.

IT investment will also be utilized for improvement of information system, in particular, the sales

management and the business process audit. IT may be useful to the exploitation of new customers

and the customers management, which will contribute to the sales increase and accordingly to the

profit improvement.

The investment for the improvement of mail handling will reduce the loss and damages of mails

contributing to improving the reputation of MPC. Specifically, it includes the investment for

introduction of carts, roller conveyors, etc. at the Central Post Office and the Aimag Post Offices.

The investment is not so high in amount, but it will produce great effects that will result in the

recovery of reliability.

The mailing business is a labor-intensive, typical service industry. It is therefore very important

to invest for the training/education of employees that motivates them to work for MPC.

Training/education is intended for practical improvement of operations and the compliance with

technological innovation. The proposed training/education program aims at improving the

productivity based on such a concept. Since the proposed operation plan is to seek the improvement

of productivity while preventing the number of employees from increasing, importance is attached to

training/education programs. As mentioned in the section of Organization Plan, this plan covers the

delegation of authorities to a lower class and the feedback to the assessment of employees’

performance, and can be evaluated to be a highly practicable project.

It is planned to provide the new mail handling facilities in 2005. The implementation of the

investment for such a project and the introduction of Pigeon Mail as a new mailing service are the

prerequisite for the intended improvement of profitability. If the quality of service is improved, this

can be evaluated to be a highly realizable project. It is true, however, that the finance is expected to

become tight due to the investment for an installation of new mail handling facilities, IT investment,

etc. in 2005. To cope with this problem, it is needed to carry out the government’s tentative supports

such as (1) partial exempt of taxes, (2) reduction of rental rate, etc. and the procurement of funds from

domestic and overseas (it is not allowable under the present legal system, and the revision of legal

system is required.), since it is expected to facilitate the improvement of financial position in the long

run by the increase of profits.

6.9.3.Social Evaluation

The mailing service is a basic infrastructure for promoting the market economy. It is essential

for pushing forward the market economy that the mailing services work efficiently. In the six

programs that are the concentrates of the survey results, the proposals such as the mail handling

improvement program, the mail collection and delivery improvement program and the training

program are presented as the short-term measures to cope with the current status. Those proposals

come from the current situation where the existing services are not relied upon by the existing

customers who are complaining of the loss and damages occurred on their postal items. It is most

important as one of the infrastructures for promoting the market economy to solve those problems as

early as possible. To improve them can be primarily evaluated to be important, and can also be

evaluated to be reasonable from the political and social points of view of providing a universal service

to the public. Since this proposal is based on the prerequisite that the delivery to Soums should be

maintained at the level of at least once a week.

In the long term, the management supporting system implementation program, mail handling

facilities set-up program and pigeon mail vehicles investment program are presented for the

development of advanced country-type postal service. The pigeon mail that is anticipated to realize

the advanced country-type door-to-door delivery can be said to be essential for Mongolia to achieve

the market economy and make further development in Ulaanbaatar, and so is the management

organization to realize it. In this proposal, it is shown that MPC should, after recovering the

reliability in the short term, develop its real mailing services such as the realization of house-to-house

delivery in the market economy. In this sense, this proposal can be evaluated to be a proposal of

construction of an infrastructure essential for the development of Mongolia.

Table. 6-22 Evaluation of Six Proposed Programs Technical

Evaluation Economic Evaluation

Social Evaluation

1. Mail handling improvement program 2. Collection and delivery improvement program

Proposal which meets the situation in Mongolia from the viewpoint of improving the quality. Proposal for the improvement which is able to be executed immediately based on the existing services.

Investment for improving MPC’s evaluation and eliminate loss and damage of mail. Although the amount of investment is not much high, economic effect is large by improving the reliability and expanding the demand and so on.

It is the most important task to solve this problem rapidly as one of the national important infrastructure for promoting the market economy. As an assumption, the delivery to Soum at least once a week should be maintained.

3. Education and training program

Proposal which meets with the situation in Mongolia from the viewpoint of cost reduction and increasing sense of service. Proposal for promoting human resources training which is able to be executed soon based on the existing services.

Training is based on the improvement of actual services and technological reformation. Therefore, the investment for MPC’s training enables the improvement of productivity. For the long term, that distributes to earnings improvement directly by adding new services trainings.

We also evaluate as important from political and social viewpoints as MPC offer universal service.

4. Management supporting system implementation program

Proposal which refers to MPC’s improvement, such as the modification of management organization and the improvement of management judgment speed.

It enables to utilize in the area of information management, particularly in sales side and audit side. Especially, since sales side is useful for acquisition of new customers and management of customer database, it contributes to improvement of profit.

5. Mail handling facility set-up program 6. Pigeon mail vehicles investment program

Strategic proposal for constructing advanced-country typed mail services with door-to-door delivery and decrease of cost and so on. Based on moderate assumption for demand.

Although the cost will be gotten stringent by new construction plan for mailing facilities and the investment for pigeon-mailing vehicles, at middle term these actions will contribute to the profit improvement

The pigeon mail service, which realizes door-to-door delivery of advanced-country type within UB city, is an essential service for pulling Mongolia a market economy and its development. Also, management organization, which is required in order to realize these goals is essential, too. It will contribute to pulling Mongolia a market economy by expanding major cities after succeed in Ulaanbaatar .

(Source) JICA Study Team

6.10. Phased Implementation Plan

The whole implementation process can be divided into 2 phases; the first phase from 2001-2005

and the second phase from 2006-2010. The first phase will focus on the improvement of the current

system to prepare for the introduction of the new services, and based on that achievement, the second

phase will come into effect.

The phasing itself is not absolute. There is no problem in moving some of the items a year ahead or

behind. However, the general scope should be maintained.

(1) New Services

The essentials of the phased implementation plan of Pigeons Express Mail Service are firstly,

planning of how to deliver and pick-up, responsible area of each post office, how to transport mails

between post offices and how to sales and marketing, and secondary, preparation of sales and

marketing materials. Through use of such materials, the contents will have to be improved with

gradual experience. In middle terms, by setup of new facilities for mail handling next to the central

post office, productivity of mail delivery and pick-up will have to be raised. The new facility will help

to improve reliability and speed, and work environment of MPC employees. This will also lead to the

decrease of mail damages and raise reliability in Pigeons Express Mail Service.

(2) Remittance and Payment Service

In the short term, remittance service is planned in Aimags center and some profitable Soums. As

to profitability, evaluation of the post offices, which are already in this service, is to be made and

withdrawal of non-profitable post offices must be taken into consideration. By the year 2005, PC will

have to be purchased for the improvement of productivity in payment services. This is especially

required in local areas for the strengthening of the base in payment service. In order to meet with

clients’ need, diversification of remittance and payment means is required. Tie -up with large banks

will have to be studied. Especially the base in payment service in local area must be strengthened.

(3) Post Office Services

In post office services, it is required to study and exchange information of the successful case

studies in some post office, and to build up cooperation strategy with other companies. In order to

provide better services, MPC reviews the contracts periodically.

(4) Information System Infrastructure

Contents of communication between Aimags and Ulaanbaatar are limited currently. For better

communication, PCs will have to be used more and effectively.

(5) Mail Handling and Postal Delivery Improvement

As mail handling and postal delivery improvement, followings can be pointed out.

*Continue home delivery to subscribers

*Create delivery directories and maps

*Improvement based on the post boxes for each house and delivery

Together with investment for new facility, new services are promoted.

(6) Transportation System Improvement

Concerning improvements of transportation in Ulaanbaatar, this is to be based on demand.

While transportation from central post office to destined post office must be decreased, setup of

separate routes in affiliate offices is required. Private transport companies can be partly introduced for

the improvement of main routes. In case delivery to Bags is profitable, consignment to private

operators is introduced.

(7) Organizational Setup

The scope of duties must be revised in early stage. In order that the top layer can concentrate on

management matters, the right of approval for administrative matters must be delegated to the group

leaders. At the same time, establishment and disclosure of job evaluation standards of the employees

shall be introduced and put in practice. Project groups as personnel training group, sales planning

group and inspection group should be introduced. In the year 2005, campaigns for “Pigeon” services

should involve all employees to nurture the mind of “customer-first” to all of them.

(8) Human Resources Development

In the year 2001, personal training group is established and for the planning and provision of

training courses, the professional group consisted of members from the human resources &

administration / postal operation & inspection divisions should be set up. Thereafter training in

accordance with the carrier development of the employees is performed. More concretely theories and

practice of business administration courses shall be instructed for skilled employees as well as

administrative staff. These courses should be taught by outside experts in the initial stage and in-house

instructors are to be trained. It is important to have this training in long term. In the year 2002 to 2003,

training of “Pigeon” services should be introduced and training for the employees of post office in

Ulaanbaatar should be performed.

(9) Finances

In the early stage of planning, improvement of internal auditing system should be undertaken.

Utilize the existing IT resources at each Aimags and Ulaanbaatar offices in order to ensure quick and

effective data handling. Start from the creation of a template for financial data entry to facilitate

standardization and effectiveness. Aiming effective introduction of new service, this starts as planned

from year 2005. Since new tasks and financial positions are affected, it is required to make forecast

model and to be prepared to take any strategy corresponding to the start-up speed of the new service.

The To-Do items for each phase are summarized in the table 6-23.

Table. 6-23 Summary of the Actions for MPC

New Services Stage Planning Items Key explanations

2001 2003 2005 2010 1. Pigeons Express Mail Services Planning of the Pigeons Express Mail

Services Planning of how to deliver and pickup, responsible area of each post office, how to transport mails between post offices, how to sales and marketing, etc.

Introduction of door to door delivery/ pick-up services in UB

Door to door delivery and pickup services will be introduced gradually.

Sales and marketing of existing mail services by visiting customers actively (with expansion of delivery service)

Retrieval and expansion of customers and input in the customer database.

Preparation of marketing materials For sales/marketing persons, tools will be prepared and updated with gradual experience.

Preparation of work manuals for employees

For sales/marketing persons and other staffs (mail carriers, etc.), organizational business flow, etc. will be prepared and updated with gradual experience.

Setup of new facilities for mail handling near the central post office

For reliable and speedy services as well as good work environment, new facilities will be introduced. This facility is one of the key factors for Pigeons Express Services.

Replace of existing mail services with new Pigeon Express Services

Gradually switch existing services to Pigeons Express Services and establish universal service in Mongolia

2. Remittance and Payment Services . Planning and evaluation of Remittance

and Payment Services Planning of Remittance/Payment Services in all Aimags and some profitable Soums as well as evaluation of achievement by post office and setup of profitable business model.

Investment and expansion to other post offices

Expansion of services in other post offices with careful examination of market needs and profitability.

Modification and /or diversification of payment means and business model

With experience up to 2005, new business model and additional means of payment will be planned and executed in cooperation with MOF, BOM, etc.

Stage Planning Items Key explanations 2001 2003 2005 2010

3.Post Office Services Planning of other new services New services such as mail order, retail, business center, e-

mail, government entrusted services, etc. will be planned. Clear definition of bus iness model and flow should be defined.

Study and exchange of information for the successful case studies in some post offices

To promote how to introduce new services in each post office especially in Aimag level, it is a good source.

Preparation of marketing materials For sales/marketing persons in many post offices, tools will be prepared and updated with gradual experience.

Preparation of work manuals for employees

For sales/marketing persons and other staffs (mail carriers, etc.), organizational business flow including among UB, Aimags and Soums, etc. will be prepared and updated with gradual experience.

Expansion/Abolishment of cooperation with private companies, etc. to provide profitable and/or attractive products/services

In order to expand products and services in post offices, MPC will arrange necessary partnerships with various possible companies. In order to provide better services existing partnership should be re-examined periodically.

Proposal to government and arrangement of agreement to provide entrusted services

For the universal service, post office should play the important role to be the outlet of national government to provide their services on their behalf. Arrangement of subsidies or other benefits will be negotiated by and between MPC and Mongolian governments

Modification and /or diversification of payment means and business model

With experience up to 2005, new business model will be established and such services will be expanded in the standardized manner.

4.Information System Infrastructure Promotion of using existing PCs Contents of communication between Aimags and UB are

limited currently, and need to train and promote for better communication.


Preparation of standardized format to report and communicate within MPC

For daily business process, many reports and statistics are processed by hand, and need to create simple and standardized format by such as spread sheet.

Introduction of advanced systems such as track and tracing systems of mails, etc.

With careful examination of mail volume, investment vs effect, etc. new information systems will be planned and introduced.


Collection, Delivery and Sorting Work Improvement Stage Planning Items Key explanations 2001 2003 2005 2010

Improvement of the Internal Operation - Abandon unnecessary procedures (the postmarking of via dates, recording of unnecessary mail, etc.) - Establishment of better work Procedures in the Central Post Office - Establish operational hours for P.O.Boxes

Improve Delivery - Continue home delivery to subscribers - Create delivery directories and maps - Improvement based on the post boxes for each houses

Recover trust to the service - Introduce internal auditing process - Introduce clear responsibility

Improve The Working Condition of Delivery Staff

- Create manuals and documents

Reconsider Publication Handling - Continue home delivery to subscribers - Create delivery directories and maps

Planning of New Facility - Planning for new facility for mail handiling - Completion of new work flow

New Facility Operation - Starting new facility operation above mentioned

Improvement of the Postal Code

- based on the new jurisdiction

Efforts for New Service - Create manuals and documents - Promote new service

Transportation System Improvement Stage Planning Items Key explanations

2001 2003 2005 2010 Restructure Transportation within UB - Reorganize based on demand

- Improve and possibly increase delivery

Restructure Transportation between Aimag - Reorganize based on demand - Reassign vehicles

Improve International Transport - Improve transferring of items(UB & Zamyn Uud) Restructure trunk routes - Improvement based on demand

- Possibly utilize private operators

Table. 6-23 Summary of the Actions for MPC (Cont’d)



Organizational Setup Stage Planning Items Key explanations

2001 2003 2005 2010 1.Revision of the scope of duties The right of approval for administrative matters must be delegated to

the group leaders so that the top layer can concentrate on management matters. Revision of the executive post rules (defining the scope of duties for group leaders) is needed.

2.Revision of work burdens Proper revision of the executive post rules and the terms of reference for each employee (defining the scope of duties for each employee) is needed so that work is apportioned in a manner that prevents unbalanced burdens in administrative posts.

3.Establishment and disclosure of evaluation standards

Establishment and disclosure of job evaluation standards are needed according to each job criterion. A job evaluation process that allows employees to rate their own performance and has the opportunity to discuss it with their superior should also be established.

4.Establishment of project groups The following project groups should be added to the current organization so as to undertake given tasks efficiently: (1) Personnel training group (2) Sales planning group (3) Inspection group (reallocation of present staff) (4) Document management group

5.Establishment of standards for document management

The sharing of information is effectively pursued by establishing the following standards for document management: (1) Document storage / storage procedure (2) Document abolishment (3) Document preparation in fixed forms corresponding to the usage

6.Improvement of the work environment

Proper arrangement and conditioning of the work place, as well as employees wearing uniforms and name tags, are important to improve productivity and consumer satisfaction.


7.Preparation of work manuals Work manuals should be prepared on a company-wide scale to assist in the posting of employees freely and flexibly under the project group management system.

8.Improvement of the information-sharing activities

Proper practice of reporting, notifying, and consulting should be introduced as the means of information-sharing and pooling of knowledge to reach solutions for given problems.

9.Issue of regular in-house newsletters

The newsletters are a good measure for sharing information and goals among all employees (including those in Soums).

10.Promotion of letter writing activities

Campaigns for letter-writing activities by various means including the formation of letter-writing groups in the community and local schools should commence to assist the promotion of postal services.

11.Change in Soum personnel Staff at Soum post offices can be replaced by the best available personnel through application of annually adjusted contracts so as to improve the financial status of each office. The achievements of outstanding offices should be publicized nationwide through in-house newsletters.

12.Change in the status of Soum personnel

Full-time staff at Soum post offices and drivers in Aimag offices can be replaced by employees hired on a commission contract basis.

13.Promotion of campaigns for “Pigeon” services

Campaigns for “Pigeon” services should involve all employees to nurture the mind of “customer-first” to all of them, which enables MPC to improve its services in quantitative terms.



Human Resources Development Stage Planning Items Key explanations

2001 2003 2005 2010 1.Establishment of personnel training

group For the planning and provision of training courses, the professional group consisted of members from the human resources & administration / postal operation & inspection divisions should be set up.

2.Establishment of training plan Drafting the general architecture of training system, which is deduced from the long-term objective of MPC, is the first step to take necessary measures.

3.Establishment of training courses learned in the program overseas

The knowledge and techniques learned in the program overseas should be taught by the participants of the program in order to share their experiences with other employees.

4.Documentation of the training contents learned in the program overseas

The materials participants of the program overseas should be translated into Mongolian and stored in a document room for public use

5.Provision of training courses in accordance with career develop-ment path of each employee

Theories and practices of business administration courses are important for skilled employees as well as administrative staff. These courses should be taught by outside experts in the initial stage and in-house instructors are to be trained.

6.Diversification in training methods Staff of the personnel training group should learn the training skills, such as case studies, role playing and business games, as well as know-how to develop training materials with the assistance of outside experts.

7.Better pay / position in accordance with the achievement in the courses

The achievement in the staff training courses can be reflected to participants’ salaries or promotion as a motivation to make their efforts.

8.Better pay for in-house instructors Better pay is necessary for the contribution of in-house instructors in the current staff training courses, since no extra allowance is paid.


9.Improvement of OJT activities The way in which OJT activities are performed should be improved by introducing following steps. (1) Setting each employee’s achievement goals (2) Preparing a check list to attain each step goal (3) Consulting with a superior to follow PDCA cycle

10.Establishment of comprehensive training courses for “Pigeon” services

Provision of the special comprehensive training course for employees in Ulaanbaatar post offices is needed to support the sales campaign for “Pigeon” services.



Finances Stage Planning Items Key explanations

2001 2003 2005 2010 1. Improve Internal Systems Utilize the existing IT resources at each Aimags and UB offices in

order to ensure quick and effective data handling. Start from the creation of a template for financial data entry to facilitate standardization and efectiveness. Along with it, create an internal auditing system to ensure proper match between various data.

2. Plan for New Investment Investment level of MPC needs to increase, which should become a financial burden. Make clear plans to deal with the financial situation. Plan for the source of funds, and weigh various options carefully in order to avoid unnecessary risk.

3. Maintain Financial Health Create a warning system for your finances, based on various finaancial ratios, such as profit ratio, level of cash at hand and others. Try to create a target for various ratios, and make efforts to maintain them.

4. Maintain Profitability The new operation will temporary create a tough situation for the MPC finances. Using the ratios and financial checks that were developed earlier, maintain profitability and financial health, although do not sacrifice long run benefits for short term profits.

5. Effective Handling of New Service Introduction

The new services will introduce new challenges and financial conditions to MPC, especially if it should grow as fast as planned. Make forecast models to think through the various implications that the fast growing new service will create, and create a strategy to deal with the situation.


6.11. Recommendation

It is most important for MPC to show its firm leadership by strong will

in promoting the improvement of services. However, in connection with the leadership, there is

a necessity of clear understandable planning that is possible to implement. And furthermore,

such planning should be penetrated in the whole MPC.

We can raise five points important for MPC to promote the short-term planning as follows:

(1) Improvement of the existing mailing services: clear targets and its implementation

It is important to promote the use of mail prior to the introduction of pigeon mail. The

present status is unacceptable that the mail volume has been decreasing contrary to the

economical growth. MPC should concentrate its energy on sales promotion by utilizing its

existing resources (both personnel and physical). According to the analysis, there will be no

need to increase fund for expenses and the human resources for its implementation will suffice

in the short term.

MPC is required to take the measures to make the possible best use of the human resources by clear targets and incentives. It is important to carry out sales promotion on all of the services rendered by MPC.

In parallel to the efforts mentioned above, it is also needed to make the internal work

process smoother than ever. The statistics and audit will play an important role in assessment of

the implementation of the plan.

1) House-to-house delivery: an important means for customer development

MPC should expand the area of house-to-house delivery as much as possible before

introduction of new services (pigeon mail). It would increase the opportunity to contact the

customers and lead to the effective survey of customer needs, which will also serves to the

improvement of services and marketing activities.

2) Important roles of the post offices in the Ulaanbaatar city

When the above two points are considered, the roles of the post offices in the

Ulaanbaatar city are very important. It is because they can be the better contact points

with customers. As for the post office boxes, there will be no need to address it in the

short term, and the ZIP codes is regarded as the long-term issue as well.

In the proposed introduction of pigeon mail as a new service, the role of the post

offices in the Ulaanbaatar city will become far more important.

(2) Compliance with the market economy

It is important for the management and the employees to be fully aware of how to comply

with the market economy, take out the market needs and create the market. It is not a matter of

difficulty, but needs the reform of senses. For example, there is a need for mail in settlement of

cellular phones (once a month), that is, a method of mailing the invoices for settlement to

customers. It will be possible to take the potential customers into MPC. Specifically, a project

team should be organized in MPC to draw up a plan to put it into practice. As pointed out in this

report of the study team, the mailing business in relation to such settlement will be an important

source of customers.

(3) Establishment of self-paying system

Even if the mailing business is of public nature, it is not allowed to run an unprofitable

operation neglectful of the profitability of services. Therefore, MPC must pursue the

profitability and the operation in which MPC can achieve an appropriate investment and

business planning. For this purpose, the management with a clear managerial policy and meeting

the market needs should be established. In order to restructure an enterprise toward the growth

accompanied by profits, there are necessary 1) flexibility matching the customer needs and the

services 2) training of human resources, 3) transparency of organization, and 4) accountability

of the enterprise. In order to promote market development positively, it is necessary to motivate

the employees by delegation of authorities, openness of the enterprise and fair assessment to

enhance the activity of the enterprise.

In the long term, there are three important points involving the services as follows:

(4) Development of pigeon mail

MPC should realize the house-to-house delivery in the Ulaanbaatar city for the time being,

and provide the facilities for handling the mail in the city equipped with the devices not to

damage or destroy the mail, whereby a mail service is provided with such level of reliability and

serviceability as those provided by other competitors. It can be said to be a new service from the

point of view of business models.

Pigeon mail will occupy an important position in the light of influence and development on

future service development. In the Ulaanbaatar city, since you can promote high value-added

dispatch service and EMS services for money-related mails, direct mails, official documents to

big customers such as enterprises and government agencies and international institutions, MPC

should aim at early realization of house-to-house delivery with the pigeon mail as a core

business. At the same time, as the mails will increase from those corporations, the house-to-

house delivery for individuals should also be realized.

(5) Expansion of new services

Based on the forecast of remittance and money supply and the MPC’s market share, Table

6-4 shows that of remittance and settlement business. At the first stage, the contract between

MPB and MPC should be reviewed and the necessary burden for MPC should be reduced.

Remittance and settlement services should be promoted step by step separating the

planning by the short term and the long term. Profitability and extension should be prioritized in

the short term, while the rationalization measures associated with the reduction of fees should be

taken in the long term. In the long run in and after 2005, services should be diversified focusing

on new services such as the transmission into bank accounts, cash payment, easy payment, etc.

classified by remittance methods.

(6) New services

As the new services, it is suggested that services should be extended to those areas which

are possible to commercialize from among 1) retail service (foods, daily necessities, 2) other

good for institutional use, 3) government-related services, and 4) services relating to the national

development projects. The introduction of new services will facilitate 1) the operating ratio of

mailing routes by adding up the new services and 2) the higher profitability of mail-related

ancillary business.

chapter 6 basic guidelines for the improvement plan · in these aimags, however, the demand should...

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